High Yield Management

The High Yield investment strategy is designed to maximize total return (current income and price appreciation) primarily through the active management of securities rated Ba1/BB+ and below. WCB seeks to provide excess returns relative to the Merrill Lynch US High Yield Master II Index, while maintaining an overall risk level similar to that of the benchmark through the course of a market or credit cycle, but with opportunistic variances in risk positioning to reflect valuation anomalies.

At WCB, high yield portfolios are managed to reflect our philosophy that in normal or “fair value” credit markets, high yield returns are primarily a function of income and interest on income. However, at pronounced valuation extremes, capital appreciation or loss dominate income in determining total return. Hence, the execution of the WCB high yield strategy involves a balanced effort to (a) maximize income while minimizing capital loss potential (in low spread/yield environments) and (b) maximizing capital appreciation potential (in high spread/yield environments).