4Q2024 - Credit Opportunities Fund Commentary
Today, we are being more cautious and are willing to sacrifice yield for safety. Safety for us means investing in competitively advantaged businesses that generate sustainable free cash flow and offer a reasonable margin of safety.
- Over the fourth quarter of 2024, the Polen Credit Opportunities Fund (the “Fund”) returned 1.08% versus the 0.16% return of the ICE BofA U.S. High Yield Index (the “Index”)
- Below-investment-grade credit experienced mixed results in the fourth quarter, driven by rising yields and widening spreads. Leveraged loans delivered a positive return and outperformed high-yield bonds, which posted a more modest gain.
- Baffinland Iron Mines Corporation and Asurion, LLC were the top contributors to total returns during the quarter, while Specialty Steel and Dexko Global detracted the most significantly.
- Polen Capital did not make any meaningful changes to fund positioning. However, we initiated a position in T BAILEY, INC., a leading provider of industrial-sized tanks, casings, pipe, casing and penstock.
- As we enter 2025, our primary concerns today include a monetary policy mistake, a weaker consumer, larger fiscal deficits, and growing geopolitical risks.
- In our view, remaining patient and not overreaching for yield will leave our Fund well positioned to take advantage of compelling opportunities as the cycle ages.