4Q2025 - Credit Opportunities Fund Commentary
Given historically tight spreads but still‑attractive yields, active managers need to look beyond headline valuations to identify idiosyncratic opportunities, using discipline during market dislocations to capitalize on inefficiencies over time.
- In Q4 2025, the Polen Credit Opportunities Fund (the “Fund”) lagged the 50% ICE BofA U.S. High Yield Index / 50% Credit Suisse Leveraged Loan Index.
- During the quarter, high-yield bond yields fell as investors absorbed two more Fed rate cuts. Although leveraged loans lagged their fixed rate peers, a resilient economy, and a dovish Fed were viewed positively by loan investors.
- Asurion and Covetrus contributed the most to total returns, while Oldcastle BuildingEnvelope and Realtruck Group were the largest detractors during the quarter.
- The Fund’s positioning did not change materially. Most trading activity involved purchases and sales in existing holdings.
- Despite tariff uncertainty and the prolonged government shutdown, the U.S. macro environment remains constructive, supported by policy tailwinds, robust AI‑related investment, and a resilient but increasingly uneven consumer and corporate backdrop.