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Monthly Strategy Update: SiM US HIGH YIELD with ESG overlay

Links to the other Candoris Monthlies:
DSM US, Global, EME Growth         Coho ESG US LC        PAM Senior Loans        VanEck EME       VanEck EMD

 

Good morning,

In April the BofA ML US High Yield Master II index (EUR Hedged) returned 1.15% while the SiM US HY UCITS fund (with ESG overlay) returned 1.73%, outperforming the benchmark with 58bps (Net of fees and EUR Hedged).

Market commentary:
Portfolio managers Gary and Ryan will discuss the state of the US HY market and outlook together with current positioning in an interactive webinar tomorrow:

Click
here to sign up for the SiM US HY webinar May 8th, 16.00h CET.

Please reply to this email in case you cannot make it and want to see the replay. 

Current characteristics of the fund vs the benchmark:



Data above is as of 26-4-2019



 





NEW WEBINAR!
On 8th of May 2019, 16:00 CET, the SiM investment team wil host a webinar presenting the US HY market and outlook, a short firm update, the investment process and results. 

Click
here to sign up.


US High Yield Master II Index, Spread-Govt

 

 

 

SiM's investment approach has proved to be effective for 2 decades. Before starting their own firm, the same team managed a US HY portfolio from 1998 till 2009 outperforming 96% of peers. Since inception in 2011 the SIM US HY strategy again outperforms 97% of all US HY peers in eVestment with this unique very different investment approach. Up market capture between March 1, 2011 and 31-3-2019 is 104.13 Down market capture is 82.45%.

 

 

SiM has proven to provide superior returns with similar risk compared to the benchmark and other strategies (track record since inception in 2011)



The Strategic income Management (SiM) US High Yield strategy is a concentrated strategy focused on long term investing. A core portfolio is complemented with out of favor sectors and small cap issuer allocations. The team has successfully employed the same strategy together for 19 years and manages a top performing USD 1.5 Billion US mutual fund. A daily liquid UCITS fund is available.

 

SiM Documentation

 

 

 








The investment philosophy is based on the premise that a core portfolio, built around long-term trends, and within the appropriate industries will outperform over a cycle and provide stability and downside protection. Additional alpha is added by investing in small cap bond issuers, out-of-favor industries, and non-traditional high-yield instruments. Focus is long-term with a low turnover.

 

 

Performance

 

In April the BofA ML US High Yield Master II index returned 1.15% while the SiM US HY UCITS fund (with ESG overlay) returned 1.73%, outperforming the benchmark with 58bps (Net of fees and EUR Hedged).

YTD the BofA ML US High Yield Master II index returned 7.84% while the SiM US HY UCITS fund (with ESG overlay) returned 7.20%, underperforming the benchmark with 64bps (Net of fees and EUR Hedged).

SiM's investment approach has proved to be effective for 2 decades. Before starting their own firm, the same team managed a US HY portfolio from 1998 till 2009 outperforming 96% of peers. Since inception in 2011 the SIM US HY strategy again outperforms 97% of all US HY peers in eVestment with this unique very different investment approach.

 

 

SiM US High Yield Composite data                                               SiM US High Yield Fund Facts
 

Alpha

1.89

 

 

 

ISIN

IE00BF1XKR94

Beta

0.92

 

 

 

Benchmark

BofA ML US HY Master II

Std Dev

5.69

 

 

 

Currency

EUR

UMC

104.13

 

 

 

Bloomberg ticker

SIMHEIC:ID

DMC

82.45

 

 

 

Asset Class

Fixed Income

Information Ratio

0.83

 

 

 

Type

High Yield

Tracking Error

1.84

 

 

 

Region

United States

Sharpe Ratio

1.26

 

 

 

Dividend policy

Accumulating


Data as of 31-3-2019 source eVestment

 

About SiM
Strategic income Management (SiM) is fully dedicated to US High Yield investing. Their successful strategy has a core portfolio built around long-term trends that provides stability and downside protection. Over the full cycle the core portfolio outperforms, additional alpha is created by investing in out-of-favour sectors that are on a long term path of recovery; small cap bond issuers and non-traditional high-yield instruments. 

Since inception in 2011 the SIM US HY strategy ranks 3rd percentile. Before starting their own firm, the same team managed a US HY portfolio from 1998 till 2009.

 

SiM is unique versus peers, having an up market capture above 100 and a downmarket capture of 82

 


 

 

SiM provides higher returns vs peers, while having the same amount of risk of the Benchmark

 

 

SiM Unique Investment Approach

 

 

 

More about SIM
-SIM is based in Seattle and manages about USD 1.5 Billion in US High Yield. 
- It is an employee owned boutique, no staff turnover, full commitment and dedication
- SIM manages 1 strategy, so pure focus
- The team is together for 25 years. Initially at Principal investors/Edge and since 2011 at their own firm
- Excellent track record: During the 10 years at Principal the team scored top 4% out of all US High Yield managers. 
- The team is currently ranked 3rd since inception and 6th on a 5 year basis.
- Different approach to investing than most HY managers
- Commitment to Europe, recently launched UCITS fund, 2 yearly trips to Europe, long term partnership with Candoris.