The Ryan Labs high yield fixed income philosophy is conservative but opportunistic, index focused and focused on issue selection as a source of adding value. As market pricing gets aggressive, we allow the portfolio to become more conservative. We strive to be in a position to add credit risk when the market comes under pressure and are less concerned with carry yield relative to the benchmark instead focusing on principle returns.
Our focus on maintaining cohesiveness with the Barclays High Yield Index sets the course for our portfolio positioning, but the Ryan Labs High Yield Strategy is not as benchmark driven as our market index and liability driven strategies. As 30 names in the high yield index/universe have weights of at least 0.5%, we pay close attention to these high concentration names seeking to avoid poor performers. When mispricings occur, we work to add those names into the strategy. Sub-sector selection is important, but we focus on sectors that become large as a percentage of the index as these sectors may eventually come under pressure due to over borrowing.
While this strategy is more concentrated, we have smaller weights in CCC-rated names and tend to run a lower weight than the index in this part of the market. Concentration allows us to focus on best ideas and deep credit research.