Thoughts and Bonds: The Beginning of the End
Our Fundamental Fixed Income team provides insights on potential investment risks and opportunities, and shares our global outlook for the quarter ahead.
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JHYFX
)
High-Yield Fund
Core High-Yield Fixed Income
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Overview
Client Commitment
The Fund’s core high-yield strategy seeks strong, risk-adjusted results by investing in transformational balance sheet opportunities. Driven by a fundamentally based investment process, this dynamic, risk-aware approach seeks to temper the downside risks associated with the high-yield asset class over a full market cycle.
Why Invest in the Fund
- The Fund seeks to identify high-yield corporate bonds from companies committed to transforming and improving their capital structure. Our fixed income team is structured around credit industries with fundamental credit analysis driving decision-making at every level of the investment process.
- Partnership and fluid communication between fixed income and equity analysts promote idea generation. Credit research emphasizes free-cash-flow generation, quality of management and security valuation.
- Our proprietary fixed income portfolio and risk-management system, Quantum Global, is integrated into the investment process at each step. We identify and measure sources of risk in the portfolio at multiple levels to confirm that the portfolio is positioned as intended.
Core High Yield
Integrated Research
Sophisticated Risk Management
Portfolio Management
Featured Insights
Performance
RETURNS
| Inception: Dec 29, 1995 | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inception |
|---|---|---|---|---|---|---|---|
| High-Yield Fund – I Shares | 1.68% | 12.25% | 7.28% | 5.71% | 4.71% | 7.32% | 7.26% |
| Bloomberg Barclays U.S. Corporate High Yield Bond Index | 1.33% | 11.41% | 6.36% | 6.07% | 5.37% | 7.94% | 7.07% |
| Inception: Dec 29, 1995 | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inception |
|---|---|---|---|---|---|---|---|
| High-Yield Fund – I Shares | 1.68% | 12.25% | 7.28% | 5.71% | 4.71% | 7.32% | 7.26% |
| Bloomberg Barclays U.S. Corporate High Yield Bond Index | 1.33% | 11.41% | 6.36% | 6.07% | 5.37% | 7.94% | 7.07% |
Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold.
View Fees and Expenses
Performance for Class I Shares that includes periods prior to 7/6/09 reflects the performance of one or more share classes of the Fund or a predecessor fund, adjusted, where applicable and permitted, for differing fees and expenses. See the Fund’s prospectus for further details concerning historical performance.
View Fees and Expenses
Performance for Class I Shares that includes periods prior to 7/6/09 reflects the performance of one or more share classes of the Fund or a predecessor fund, adjusted, where applicable and permitted, for differing fees and expenses. See the Fund’s prospectus for further details concerning historical performance.
CALENDAR YEAR PERFORMANCE
RETURNS-BASED STATISTICS
(As of 08/31/19 CLASS I SHARES)
RISK / REWARD
|
3 YEAR | 5 YEAR |
|---|---|---|
| Information Ratio | -0.53 | -0.40 |
| Alpha | -0.31 | 0.22 |
| Tracking Error | 0.72 | 1.63 |
| Beta | 0.99 | 0.82 |
| R-Squared (%) | 96.92 | 92.22 |
UP AND DOWN MARKET CAPTURE (%)
|
3 YEAR | 5 YEAR |
|---|---|---|
| Up Capture Ratio | 97.12 | 86.68 |
| Down Capture Ratio | 104.28 | 87.84 |
STANDARD DEVIATION |
3 YEAR | 5 YEAR |
|---|---|---|
| High-Yield Fund | 4.12 | 4.67 |
| Bloomberg Barclays U.S. Corporate High Yield Bond Index | 4.09 | 5.46 |
SHARPE RATIO |
3 YEAR | 5 YEAR |
|---|---|---|
| High-Yield Fund | 1.05 | 0.70 |
| Bloomberg Barclays U.S. Corporate High Yield Bond Index | 1.15 | 0.72 |
ANNUAL FEES & EXPENSES(As of Fiscal Year End, 06/30/18) |
CLASS I SHARES |
|---|---|
| Management Fees | 0.56% |
| 12b-1 Fees | - |
| Other Expenses | 0.15% |
| Total Gross Expenses | 0.71% |
| Waivers | 0.00% |
| Total Net Expenses | 0.71% |
Net expense ratios reflect the expense waiver, if any, contractually agreed to through 11/1/19.
Characteristics
Index represents the Bloomberg Barclays U.S. Corporate High Yield Bond Index.
TOP HOLDINGS(As of 08/31/2019) |
% of Fund |
|---|---|
| Golden Nugget Inc, 8.75%, 10/01/25 | 2.16 |
| Allegheny Technologies Inc, 7.88%, 08/15/23 | 1.49 |
| General Electric Co, 5.00%, 01/20/66 | 1.45 |
| Change Healthcare Holdings LLC / Change Healthcare Finance Inc, 5.75%, 03/01/25 | 1.41 |
| CCO Holdings LLC / CCO Holdings Capital Corp, 5.12%, 05/01/27 | 1.40 |
| Altice France SA/France, 7.38%, 05/01/26 | 1.40 |
| Cablevision Systems Corp, 5.88%, 09/15/22 | 1.29 |
| Great Western Petroleum LLC / Great Western Finance Corp, 9.00%, 09/30/21 | 1.16 |
| Watco Cos LLC / Watco Finance Corp, 6.38%, 04/01/23 | 1.15 |
| Altice Luxembourg SA, 10.50%, 05/15/27 | 1.12 |
| TOTAL | 14.03 |
PORTFOLIO CHARACTERISTICS(As of 08/31/19) |
FUND | INDEX |
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DEVELOPED VS. EMERGING MARKET(As of 08/31/19) |
% OF FUND | % OF INDEX |
|---|---|---|
| U.S. | 84.63 | 85.83 |
| Non-U.S. Developed | 9.68 | 13.66 |
| Non-U.S. Emerging | 2.14 | 0.51 |
| Cash & Equivalents | 3.55 | - |
CREDIT QUALITY OF FIXED INCOME HOLDINGS(As of 08/31/19) |
% OF FUND | % OF INDEX |
|---|---|---|
| A | 0.36 | - |
| Baa | 5.69 | 0.17 |
| Ba | 30.53 | 46.92 |
| B | 43.87 | 39.58 |
| Caa | 15.60 | 12.58 |
| Ca | 0.25 | 0.54 |
| NOT RATED | -2.38 | 0.15 |
Bond credit quality ratings provided by Barclays and reflect the middle rating received from Moody's, Standard & Poor's and Fitch, where all three agencies have provided a rating. If only two agencies rate a security, the lowest rating is used. If only one agency rates a security, that rating is used. Ratings are measured on a scale that ranges from Aaa (highest) to D (lowest).
SECTOR ALLOCATION(As of 08/31/19) |
% OF FUND | % OF INDEX |
|---|---|---|
| US Common Stock | 2.53 | - |
| Credit-High Yield | 83.44 | 99.83 |
| Bank Loans | 6.78 | - |
| Credit-Investment Grade | 5.18 | 0.17 |
| ABS | 0.91 | - |
| Convertibles | 0.50 | - |
| Credit Default Swap | -2.89 | - |
| Cash & Equivalents | 3.55 | - |
MATURITY BREAKDOWN OF FIXED INCOME HOLDINGS(As of 08/31/19) |
% OF FUND | % OF INDEX |
|---|---|---|
| 1 - 3 yrs | 7.61 | 15.86 |
| 3 - 5 yrs | 18.66 | 26.62 |
| 5 - 7 yrs | 34.37 | 34.29 |
| 7 - 10 yrs | 27.70 | 18.31 |
| 10 - 20 yrs | 3.06 | 3.36 |
| > 20 yrs | 1.07 | 1.22 |
| N/A | 1.45 | - |
REGIONAL ALLOCATION(As of 08/31/19) |
% OF FUND | % OF INDEX |
|---|---|---|
| North America | 85.80 | 90.13 |
| Europe | 8.52 | 8.79 |
| Africa/Mideast | 1.25 | 0.02 |
| Latin America | 0.88 | 0.10 |
| Cash & Equivalents | 3.55 | - |
Commentary & Literature
2Q19 Portfolio Commentary Highlights
- Despite intra-quarter volatility, high-yield corporate credit generated positive total returns.
- The Fund outperformed its benchmark, aided by strong security selection.
- Valuations appear rich given slowing global economic growth, and we are positioned for moderate near-term pressure in high yield.