High Yield

Seeks to maximize risk-adjusted returns while attempting to preserve the purchasing power of our client assets over the long term.

Disclosure Footnote for High Yield At-A-Glance table

**Prior to October 2011, results were achieved at a firm other than First Eagle. Portfolios are actively managed and subject to change.

123 - Investment Restrictions and Guildelines

The above are not investment guidelines or restrictions and are subject to change.

129 - Not an offer - Institutional

The information provided is not to be construed as a recommendation or an offer to buy or sell or the solicitation of an offer to buy or sell any fund or security.

Disclosure_High Yield Annual Returns

* performance for 2004 is from 11/1/2004 to 12/31/2004

118- Past Performance Not a Guarantee Disclosure

Past performance does not guarantee future results.

Philosophy

The team believes that rotating risk* in each phase of the high yield market cycle is critical to delivering consistent outperformance. In each phase of the cycle, the strategy may move to overweight or underweight higher- and lower-quality credit tiers in order to add or reduce risk to the portfolio and to rebalance the portfolio's sensitivity to economic growth.

Investment Process

The team emphasizes a fundamental bottom-up research approach that drives the identification of investment opportunities in all market environments. The three phases of the process are:

  • 1

    Credit Cycle and Strategy Assessment

    The team believes that effective management through the high yield cycle is critical to delivering consistent outperformance. They begin by assessing the primary market and continue with an evaluation of the global economic outlook.

    • Assess the primary market
    • Focus on spreads
    • Evaluate the global economic outlook
  • 2

    Fundamental Research

    The emphasis is on bottom-up fundamental research that drives the identification of investment opportunities in all market environments. Research focuses on answering one core question: Does the enterprise possess the ability and willingness to successfully pay coupons and repay or refinance principal?

    • Deconstruct the financials
    • Understand the business
    • Valuation
  • 3

    Portfolio Construction

    The team approaches risk management at both credit-specific and portfolio levels.

    • Credit-level risk management begins at the security level. The team has the flexibility to invest in opportunities that they feel have an attractive margin of safety at the time of purchase. They seek to avoid issuances whose dynamics are unfavorable to high yield debt holders.
    • Portfolio-level risk management begins by rotating risk as the team considers it appropriate to each phase of the high yield market cycle. In each phase, the strategy may move to overweight or underweight higher and lower quality credit tiers in order to add or reduce risk to the portfolio and to rebalance the portfolio's sensitivity to economic growth.

     

Competitive Advantages

  • Focus on risk* rotation versus sector rotation
  • Absolute return orientation
  • Continuity of core team with attractive long-term performance

High yield securities are rated lower than investment-grade securities because there is a greater possibility that the issuer may be unable to make interest and principal payments on those securities. High yield securities involve greater risk than higher rated securities and portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not.

Investments in bonds are subject to interest-rate risk and can lose principal value when interest rates rise. Bonds are also subject to credit risk, in which the bond issuer may fail to pay interest and principal in a timely manner, or that negative perception of the issuer's ability to make such payments may cause the price of that bond to decline.

Bank loans are often less liquid than other types of debt instruments. There is no assurance that the liquidation of any collateral from a secured bank loan would satisfy the borrower's obligation, or that such collateral could be liquidated. All investments involve the risk of loss of principal.

There are risks associated with investing in securities of foreign countries, such as erratic market conditions, economic and political instability and fluctuations in currency exchange rates.

*In this context, risk is defined as the use of high yield securities rated below the highest rated category of non-investment grade. High yield bonds include those that carry a rating such as Ba1/BB+ or lower by credit rating agencies. All high yield securities are considered "speculative" and are often referred to as "junk" bonds.

Disclosure_High Yield Annual Returns

* performance for 2004 is from 11/1/2004 to 12/31/2004

118- Past Performance Not a Guarantee Disclosure

Past performance does not guarantee future results.

173-High Yield Institutional Special Risks

The High Yield strategy invests in high yield securities (commonly known as "junk bonds") which are generally considered speculative because they may be subject to greater levels of interest rate, credit (including issuer default) and liquidity risk than investment grade securities and may be subject to greater volatility. The strategy invests in high yield securities that are non-investment grade.  High yield, lower rated securities involve greater price volatility and present greater risks than high rated fixed income securities.  High yield securities are rated lower than investment-grade securities because there is a greater possibility that the issuer may be unable to make interest and principal payments on those securities.

67-Disclosure Special Risks GIB Bond Risk HY, GIB

Investments in bonds are subject to interest-rate risk and can lose principal value when interest rates rise. Bonds are also subject to credit risk, in which the bond issuer may fail to pay interest and principal in a timely manner, or that negative perception of the issuer's ability to make such payments may cause the price of that bond to decline.

63-Disclosure Special Risks Bank loan special risk HY, GIB

Bank loans are often less liquid than other types of debt instruments. There is no assurance that the liquidation of any collateral from a secured bank loan would satisfy the borrower's obligation, or that such collateral could be liquidated.

HV_Disclosure

N.A. – Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year.
*Performance represents a non-annualized partial period return beginning on 11/1/2004
**Bloomberg Barclays U.S. Corporate High Yield Index

High Yield Composite contains fully discretionary high yield accounts invested primarily in the high yield, below investment grade instruments, including corporate debt and loan instruments. For comparison purposes, the composite is measured against the Bloomberg Barclays US Corporate High Yield Index. The asset mix of the accounts in the composite may not be comparable to the Bloomberg Barclays US Corporate High Yield Index. Indices do not incur management fees or other operating expenses. Investments cannot be made directly into an index.

Prior to 07-Dec-2009, First Eagle Investment Management, LLC was known as Arnhold and S. Bleichroeder Advisers, LLC.

First Eagle Investment Management, LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. First Eagle Investment Management, LLC has been independently verified for the periods 01-Jan-1996 through 31-Dec-2017.

Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The High Yield Composite has been examined for the periods 01-Nov-2004 through 31-Dec-2009 and from 01-Oct-2011 through 31-Dec-2017. The verification and performance examination reports are available upon request.

First Eagle Investment Management, LLC is an independent SEC registered investment adviser. The firm maintains a complete list and description of composites, which is available upon request.

Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. Non-fee paying assets as a percentage of the composite’s assets on 31-December were 62.68%, 45.86%, 55.36% and 62.31%, for 2007, 2008, 2009 and 2010, respectively. Past performance is not indicative of future results.

The U.S. Dollar is the currency used to express performance. Returns are presented gross and net of management fees and include the reinvestment of all income. The net of fees performance is calculated using the highest management fee of 0.80% applied monthly. Prior to February 2016 the net of fee performance was calculated using the highest management fee of 0.70% applied monthly. The change in fees used to calculate composite net performance was due to one of our larger funds being assessed a higher fee in February 2016. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. From 01-Nov-2011 to 31-Dec-2013, return figures for client account that is a mutual fund reflect contractual waivers and/or expense limitations, without which net returns would have been lower.

The investment management fee for separately managed accounts is 0.70% on assets. Actual investment advisory fees incurred by clients may vary. The collection of fees produces a compounding effect on the total rate of return net of management fees. As an example, the effect of investment management fees on the total value of a client’s portfolio assuming (a) quarterly fee assessment, (b) $1,000,000 investment, (c) portfolio return of 8% a year, and (d) 1.00% annual investment advisory fee would be $10,416 in the first year, and cumulative effects of $59,816 over five years and $143,430 over ten years. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request.

The High Yield Composite was created 01-Nov-2004. Performance presented prior to 01-Oct-2011, is for accounts managed by Edward Meigs, CFA and Sean Slein, CFA while they were affiliated with another firm and had portfolio management responsibility. First Eagle Investment Management, LLC acquired the High Yield Team on 30-Sep-2011 from Dwight Asset Management Company. The High Yield Team and their investment process continues intact at First Eagle Investment Management, LLC, therefore the current composite performance is linking to the prior composite history.

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Contact Us

Head of Institutional

Doug Meyer, CFA
doug.meyer@feim.com
212.698.3013

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