Commentary
3Q2024 - Credit Opportunities Fund Commentary
We continue to identify attractive opportunities amongst issuers across each segment of the leveraged credit markets. We view the current environment as favorable for experienced active managers like us to potentially identify opportunities for significant alpha.
- Over the third quarter of 2024, the Polen Credit Opportunities Fund (the “Fund”) returned 1.67% yet underperformed the ICE BofA U.S. High Yield Index (the “Index”)
- High yield bonds and leveraged loans generated positive performance in the third quarter, with high yield bonds outperforming leveraged loans. Falling yields and resilient economic activity supported leveraged credit markets in Q3.
- Madison IAQ and Sterling Entertainment Enterprises were the top contributors to total returns during the quarter, while OnTrac and American Tire Distributors detracted the most significantly.
- Polen Capital did not make any meaningful changes to fund positioning. We continue to experience refinancing activity among loans and have deployed those proceeds primarily into high yield bonds.
- We believe current yield levels in leveraged credit markets are compelling and offer the potential to compensate investors for the increased risk associated with tighter spreads.
- We maintain a constructive view of the high yield bond and leveraged loan markets. Although spreads are tight, the opportunity to uncover relative value remains.