Leveraged Finance European High Yield

Investment Objective

 PGIM Fixed Income's European High Yield Bonds Strategy seeks to earn 125 basis points (bps) of alpha over ICE BofAML Euro HY ex Finance 2% Constrained Index.1 We expect tracking error based on historical volatility measured over a long term period to occur from holding position sizes in portfolios that differ from the issuer’s weighting in the benchmark and from holding positions in issuers that are not in the benchmark.

1 There is no guarantee that this objective will be achieved.

Available Vehicles

Available Vehicles

Separate Account

UCITS

Investment Philosophy

PGIM Fixed Income believes that actively managed European high yield bond portfolios, constructed from the bottom up using methodical, research-based sector, subsector and security selection, can lead to consistent outperformance versus the broad European high yield index. We focus on security selection which has proven to be a high information ratio activity, and we believe that duration, curve and currency bets in developed market sectors are lower information ratio activities and accordingly we spend no or a low percentage of the risk budget on these latter activities.

Investment Process

PGIM Fixed Income employs a disciplined, three-step investment process to manage European High Yield Portfolios:

 

  1. Leverage firm resources to define the current global backdrop and risk appetite

  2. Security selection, portfolio construction, risk budgeting

    Macroeconomic & Fundamental Research

    Market strategists provide continual macroeconomic assessment

    Research team evaluates all issuers in the universe. Focus on downside protection:

    • Asset Quality
    • Capital Structure
    • Covenants
    Arrow Right

    Relative Value Analysis

    Portfolio managers evaluate and maximize relative value among approved universe:

    • Choose regions & select countries that reflect macro perspective
    • Choose fundamentally strong credits with best relative value
    Arrow Right

    Portfolio Construction

    Credit Analysts, portfolio managers, and risk managers provide continuous oversite:

    • Actively monitor all credits
    • Closely monitor industry and issuer exposures
  3. A rigorous process is employed to monitor risk at all levels

Senior Portfolio Managers

 

Robert Cignarella

CFA, Head of Leveraged Finance

 

Jonathan Butler

Head of European Leveraged Finance