Aristotle Credit Partners
Strategic Credit
Strategy Overview
The Strategic Credit strategy seeks to outperform the total return of a blended benchmark* at a lower overall portfolio risk level using a diversified portfolio of high yield bonds, bank loans and investment grade corporate bonds. We believe the strategy’s multisector approach, diversified nature and wide opportunity set can allow for substantial yield with only modest duration compared to other fixed income strategies.
Investments target the upper two tiers of the high yield and bank loan markets and the “A” and “BBB” tiers of the investment grade corporate market. Portfolio managers have flexibility to position the strategy for various credit and interest rate environments by rotating among high yield bonds, bank loans and investment grade corporates. The potential investment strategies and alpha sources may include issuer and industry selection, sector rotation, yield curve positioning and capital structure decisions.
Benchmark: Blended Benchmark*
Cash: Maximum 5%
Minimum Issue Size: $150M Original Issuance
Maximum Issue Holding: 10% of Original Issuance
Maximum Industry Allocation: 30%
Portfolio Minimum Average Quality: BBB
Minimum Security Rating: B/CCC
Issuer Max: BB: 4%; B: 3%; B/CCC: 2%
Maximum Allocation to Split B/CCC: 5%
Duration: +/- 25% of Index
*Blended Benchmark represents a blend of the 1/3 Bloomberg U.S. High Yield Ba/B 2% Issuer Capped Bond Index, 1/3 Bloomberg U.S. Intermediate Corporate Bond Index and 1/3 Credit Suisse Leveraged Loan Index. The Bloomberg U.S. High Yield Loans Index was retired on September 30, 2016 and was replaced with the Credit Suisse Leveraged Loan Index effective October 1, 2016.
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