The high yield market was higher yesterday following the lead of equities, while the 10-year Treasury yield ticked up to 2.45%, rubbing up against that technical ceiling so many are watching. S&P reported the US speculative grade default rate ticked down to 3% in December from 3.1% in October and November. This is predicted to keep going lower as 2018 progresses.
Lipper reported $186M of inflows into high yield mutual and exchange traded funds for the week ending January 3rd fueling the secondary bid as the new-issue market is slow out of the gate in 2018. This is the first inflow in four weeks. On the floating-rate loan front, loan funds reported their 20th outflow in the past 23 weeks, according to Lipper.
Even though this morning’s Jobs number came in light from a headline perspective, we believe it was really a decent number when you look at the adjustments from the hurricane season and the adjustments by retail.
For the third year in a row we believe 2018 is going to once again be the year of the active manager. Active managers work to add alpha for investors via producing above index yields/distributions to their clients/shareholders as well as potential capital appreciation as active managers like Peritus have the ability to sell/swap securities when they believe they are fully valued rather than having to wait until there is a call, maturity or take out event.
For information on the AdvisorShares Peritus High Yield ETF (ticker HYLD), the actively managed high yield exchange traded fund that the Peritus team is sub-advisor to, please visit, www.advisorshares.com/fund/hyld, distributed by Foreside Fund Services, LLC.