In like a lamb, out like a lion seems to be an accurate description of the first half of 2015. As we sit in the second week of July, Greece and China have changed investor psychology (risk-off). The overall deflationary threat globally has likely changed the timing of Federal Reserve interest rate hikes as well. Oil has once again rolled over and is likely to test 2014/early 2015 lows.

Recent spread widening for high yield bonds and loans caused by events in Greece and China gives investors what we see as an outstanding entry point and we believe that these assets need to be bought aggressively. Outside of energy (domestic oil and gas exploration and production, and certain oil services companies), we expect default rates to remain well below average. In this environment, we believe that an active and thoughtful portfolio of high yield bonds and loans should continue to outperform various asset classes, including equities and investment grade corporates, for the rest of 2015, just as the high yield market has outperformed in the first half. For more of our thoughts and strategy for today’s market and outlook going forward, click here to read our “Mid-Year Update.”