The high yield private debt market is a genuine opportunity these days for investors looking for new sources of economic return amid a backdrop of low economic growth among developed nations. Invested in credit bonds [1] with a “High Yield” rating [2] and chiefly issued in euros, the new Natixis Euro High Income Fund [3] streamlines and diversifies the portfolio over a minimum recommended investment period of 3 years.
The Natixis Euro High Income Fund is for all investors: professional players and non-professionals.
High Yield: an asset class with strong potential
The Natixis Euro High Income Fund investment universe boasts some major advantages:
- a broad universe with ongoing expansion: over the last 10 years the European High Yield market has swelled from EUR 20 billion to EUR 150 billion at the end of January 2011 [4];
- attractive investment potential: High Yield bonds offer average returns well above the yields offered by issuers of low-risk credit bonds (“Investment Grade”), against greater volatility and risks, mainly credit risk and risk of capital loss;
- a low or negative correlation of spreads to other asset classes which constitutes a source of portfolio diversification for investors.
Research at the heart of the investment process
With a higher volatility than Investment Grade bonds, the High Yield asset class requires some extremely thorough expertise in selecting the issuers. The two co-managers, Philippe Berthelot, CFA, and Vincent Marioni, EFFAS, both have over 15 years’ experience with this class of assets, and can draw on the expert knowledge of the internal research team of 11 credit analysts at Natixis Asset Management. Sector specialists in all ratings, the analysts seek out the sturdiest issuers offering attractive risk/return ratios.
Stringent diversification criteria
In addition to the "bottom up" [5] management process operated on the portfolio, the management team deploys maximum internal holding criteria by sectors and issuers for the best possible diversification of the portfolio. Since it was created the Natixis Euro High Income Fund portfolio has comprised between 60 and 80 securities, and managed funds stood at EUR 104 million on March 25, 2011.
