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| Hans Stoter |
ING Investment Management is waiting for the U.S. Federal Reserve to provide more clarity on its interest rate intentions before increasing or decreasing its position in high yield. "We brought the high-yield allocation in our fixed income core-plus accounts back from overweight to neutral early last month and plan to keep it at that level until there's a more clear direction in the market," said Hans Stoter, senior portfolio manager for ING's €1 billion in European high yield, which is run out of The Hague. ING manages its global high-yield portfolios against a combination benchmark of the Lehman Brothers U.S. high-yield and pan-European high-yield indices, with U.S. high yield run from Atlanta. In the meantime, the manager is overweight high-yield bonds with moderate risk, offering a yield between 5% and 10%. "We look at the market in terms of yield buckets, since we believe yield is a better reflection of the market perception of risk than ratings," said Stoter, pointing out different triple-Cs can offer anywhere from 6% to 20% yield. The manager is underweight bonds yielding less than 5% and more than 10%.
Stoter is focusing on specific names at the moment, rather than taking large bets on sectors or countries. Within chemicals, for example, he is overweight Cognis because it continues to have strong results and is focused on deleveraging, while being underweight Rhodia because of its high leverage and operating difficulties in some parts of its business.
ING has about 50 names in the European portion of its global high-yield portfolios, aiming to limit downside risk through diversification. While no position is over 2% of the portfolio, ING has relatively large holdings in the likes of Ashtead, Seat and MTU.
