Gold Sponsor
Muzinich & Company was formed in 1988 by George Muzinich, who remains President of the company. Since 1990, the firm has specialised in the management of higher yielding corporate bonds and bank loans, initially in the USA and globally since 1999.
Today, Muzinich manages around US$5 billion on behalf of institutional investors. We have a highly experienced team of 46 people based in New York, London and Cologne. The 16-strong portfolio management and analyst team is totally focused on delivering results for our clients.
The Muzinich philosophy is simple:
- We believe that by carrying out intensive bottom-up analysis of the issuers in the high yield market, we can deliver consistently attractive returns with low volatility. We have been managing US high yield bonds for over 17 years, and in that time we have never lost money for clients in any calendar year.*
Background to the High Yield Bond Market
High yield bonds are bonds that have a credit rating of below BBB-. High yield has existed as an investable asset class since the 1980s. However, the asset class remains misunderstood by a large proportion of investors, partly because it is also known as ‘junk’. This misunderstanding creates inefficiencies which can be exploited by active investors.
In reality, the high yield market has consistently delivered higher returns than investment grade and government bonds, with similar or lower volatility. Today, the global high yield bond market is worth some US$1.2 trillion. Thousands of companies across dozens of industries borrow money in the high yield market, giving investors the opportunity to build well diversified portfolios.
The market gives investors access to both fixed rate and floating rate securities, across a wide range of maturities and credit ratings.
Following the ‘credit crunch’ in 2007/2008, we believe pricing in the high yield market is now exceptionally attractive, and offers investors a rare opportunity to achieve outstanding returns over the next few years.
Background to the Bank Loan Market
The bank loan market (also called the ‘leveraged loan’ market) has been in existence for decades, but has only relatively recently become accessible to institutional investors. In essence, the bank loan market is where banks can sell on portions of loans they have made to companies, in order to reduce their own credit exposures and to recycle capital. The key characteristics of bank loans are that they pay floating rate interest and sit at the top of a company’s capital structure, typically being secured against tangible assets.
Bank loans are typically rated in the BB/B area, so they fall into the high yield category. The analysis that is carried out on the corporate borrower is essentially the same whether investing in bank loans or high yield bonds.
Again, following the recent ‘credit crunch’, bank loans are trading at exceptionally attractive levels.
A Word on Transparency and Liquidity
It is important to note that high yield bonds and bank loans are debt securities which pay interest on a regular basis and repay the capital on maturity. These are not in any way to be confused with structured products such as CDOs, CLOs, SIVs, RMBS, CMBS or anything else with an acronym. All Muzinich high yield and bank loan portfolios are fully transparent, none invest in structured products, and all have daily or weekly liquidity.
Muzinich and Company at the 2008 Investing in Fixed Income Summit
Muzinich & Company is sponsoring the 2008 Investing in Fixed Income Summit in order to introduce high yield credit as an additional option for institutional investors looking for attractive returns from their fixed income portfolios, with low volatility and excellent diversification.
We very much look forward to meeting you at the Summit, and to sharing our knowledge and experience with you.
For more information please contact:
Thom Bentley
Director – Institutional Marketing
Muzinich & Company
Tel: +44 207 518 8765
Mob: +44 7799 061596
Email: tbentley@muzinich.com
Web: www.muzinich.com
*The gross returns from Muzinich bond funds do not reflect the deduction of advisory fees. They represent Muzinich’s High Yield U.S. Composite (“Composite” or “Muzinich Composite”). The Composite includes all fee paying discretionary high yield accounts managed with similar objectives for at least a full quarter. Composite performance reflects reinvestment of income and dividends and is based on an asset-weighted average of the time-weighted returns of each account in the Composite. Performance is expressed in US dollars. The Composite creation and inception date is September 20, 1990. As of December 31, 2007, the Composite consisted of three high yield accounts with assets totaling approximately $561,696 million.
Fees, which are described in the Firm’s ADV Part II, and related expenses will reduce returns. For example, a .50% annual investment advisory fee would have the effect of reducing the annual gross compound return by .50% in the first year and by a cumulative 2.53% in the fifth year. Past performance is no guarantee of future results. Investors may pay higher or lower advisory fees based on the size of their investment.
Muzinich & Co., Inc. is an SEC registered Investment Adviser, and Muzinich & Co Ltd. is authorised and regulated by the FSA. This report has been prepared and presented this report in compliance GIPS standards. Additional information regarding policies and procedures for calculating and reporting returns is available upon request.
This material is intended for Professional Clients under the Markets in Financial Instruments Directive, where relevant.
Past returns do not offer guarantees for future performance. Economic conditions can have a material effect on results and investments can lose money as well as gain.
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