David Albrycht, portfolio manager at Phoenix Investment Partners in Hartford, Conn., has sold some $20 million each in corporate and emerging market paper over the last month, in favor of slightly higher credit quality. Concerns about rising default rates in the high-yield market have prompted him to sell positions in companies such as Nextel Communications and Anthony Crane Rentals he says. Albrycht, who runs three fixed-income funds totaling about $500 million, has used the cash to rotate into positions that include Century Aluminum 113Ž4 % '08 (Ba3/BB-) and Dresser Inc. 9 3/8% '11 (B2/B).
Some emerging market paper was also cut for countries that have had recent credit troubles, such as Argentina, Ecuador and Turkey, and he has reduced the size of his Brazil allocation. He has put that money into structured notes and treasuries. "The days of having high-yield exposure and making money are pretty much over," he declares. He says he may sell telecom paper if the Federal Reserve continues to aggressively cut rates, though he would not say which companies he plans to unload.
Albrycht's "flagship" fund, with about $185 million in assets, has some 30% in corporates (mostly high-yield), 24% in CMBS/MBS, 13% in yankee investment grade paper, 11% in emerging market paper, 10% in taxable munis, 6% in investment grade corporates, 4% in European high yield and 2% in treasuries.
At 4.63 years, his duration is slightly short the 4.66 of the Lehman Brothers aggregate bond index.
