Leveraged Finance U.S. Broad Market High Yield
PGIM Fixed Income's Broad Market High Yield Strategy seeks to earn 125 bps of alpha with a tracking error budget of 200 bps versus the Bloomberg Barclays U.S. High Yield Index.1,2 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 met.
2 On average, over a full market cycle defined as three to five years.
PGIM Fixed Income employs a disciplined, three-step investment process to manage Broad Market High Yield Portfolios:
Leverage firm resources to define the current global backdrop and risk appetite
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
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
Credit Analysts, portfolio managers, and risk managers provide continuous oversite:
- Actively monitor all credits
- Closely monitor industry and issuer exposures
A rigorous process is employed to monitor risk at all levels