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PGIM Fixed Income's U.S. Higher Quality High Yield Strategy seeks to outperform the Bloomberg Barclays U.S. High Yield Ba/B 1% Capped Index over a full market cycle by emphasizing research-based security selection, subsector/industry selection and rotation, and trading.1,2 The Strategy focuses primarily on the upper quality tier (BB and B rated credits) of the high yield market, which historically has exhibited the most attractive risk/return characteristics.
PGIM Fixed Income manages U.S. Higher Quality High Yield portfolios based on the philosophy that bottom-up, research-based subsector and security selection can lead to consistent outperformance versus a broad high yield index with a high information ratio. We seek to construct well diversified portfolios of performing credits that are carefully researched. Intensive fundamental research is conducted by an internal research staff to identify strong and improving credits. The breadth and experience of our research organization permit us to apply intense focus on individual securities identified from a broad pool of investment opportunities. Portfolios are actively managed to capture the best opportunities and minimize credit losses, within an environment of disciplined risk management oversight.
PGIM Fixed Income employs a disciplined, three-step investment process to manage U.S. Higher Quality High Yield Portfolios:
1 There is no guarantee that these objectives will be met.
2 On average, over a full market cycle defined as three to five years.
No risk management technique can guarantee the mitigation of elimination of risk in any market environment.
Source: PGIM Fixed Income as of December 31, 2022.