| |
| Kevin Akiola |
Payden & Rygel Investment Management is looking to put money to work in single-B credits. "Our sweet spot right now is single-B's with a good credit story that yield seven or eight percent," said Kevin Akioka, portfolio manager of $2.5 billion in high-yield at the Los Angeles-based firm. The fund is eyeing stable to improving credits, not low triple-Cs. He anticipates putting new cash to work selectively in the new issue market. Akioka said the fund has been investing on a security-specific basis, rather than by industry. "We've been doing a bottom-up approach, not an over or under different industries strategy," he explained. Payden & Rygel's healthcare allocation is 2% overweight its index, the Merrill Lynch High-Yield Master II Index, due to individual credit selection. "Healthcare is interesting because there are a lot of niches within it; there are five or six or more sub-industries, so you get a lot of good companies a little different than the average high-yield bond," noted Akioka, declining to specify credits he finds attractive.
The high-yield fund is also 2% overweight the chemicals and paper sectors because Akioka anticipates those cyclical industries will benefit from a stable or strong economy. It is underweight consumer products by 1% and energy by 2% because Akioka thinks valuations are rich. The fund's duration is basically neutral its index at 4.2 years.
