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Investment Strategy

  • Our primary focus is on evaluating the underlying business fundamentals and credit risk of high yield securities.
  • Securities are purchased when we believe the yield and total return potential are attractive relative to asset and interest coverage and relative to other securities with comparable risk.
  • We are prepared to hold securities to maturity or until they are called. However, securities may be sold when price reaches our estimate of value, to raise proceeds for a more attractive opportunity or if the underlying fundamentals deteriorate.

Team

Bill Zox, CFA

Portfolio Manager

John McClain, CFA

Portfolio Manager

Suken Patel, CFA

Assistant Portfolio Manager

Douglas Gimple

Senior Portfolio Specialist

Returns

Quarterly

Period and Annualized Total Returns as of 9/30/2020
Since Inception
(12/31/2014)
5-YR 3-YR 1-YR YTD 3Q20
Gross of Fees 9.04 10.02 8.87 10.56 7.27 6.10
Net of Fees 8.59 9.51 8.33 10.01 6.87 5.97
ICE BofA U.S. High Yield Index 5.26 7.46 5.32 6.36 4.18 3.40
Swipe or scroll right for more data

Past performance is not a guarantee of future results. To view a compliant presentation for all composites, click here.

Calendar Year Returns

Year Gross of Fees Net of FeesICE BofA U.S. High Yield Index
2019 16.20 15.62 14.41
2018 1.85 1.34 -2.26
2017 11.12 10.57 7.48
2016 15.40 14.84 17.49
2015 1.02 1.02 -4.64

Peer Group Quartile Rankings1 as of September 30, 2020

  Since
Inception
5-YR3-YR1-YR
Diamond Hill Percentile 1st1st1st1st

1This is presented as supplemental information. Source: eVestment Analytics. Ranking within eVestment U.S. High Yield Fixed Income universe based on monthly returns gross of fees. Ranking data calculated on 10/18/20 (as of 9/30/20) and is subject to change as additional firms within the category submit data.

Statistics

Portfolio Characteristics as of September 30, 2020

Since Inception
Inception December 31, 2014
Status Open
Number of Issues 137
Number of Issuers 107
Yield To Maturity 6.20%
Effective Duration 3.83
Spread Duration 3.69
Weighted Average Maturity (bonds only) 6.01
Option-Adjusted Spread 569
Current Yield 5.85%

This is presented as supplemental information.

Five Year Risk Statistics2 as of September 30, 2020 (Class I Shares)

Standard Deviation 7.95%
Beta 0.95%
Sharpe Ratio 1.01

Portfolio

Portfolio Guidelines

The portfolio generally invests at least 80% of its net assets in a diversified portfolio of corporate debt securities that are rated below investment grade or are unrated.

Top Ten Issues as of July 31, 2020

  % of Net Assets
Apergy Corp 2.4
Cimpress Nv 2.3
Magnolia Oil And Gas Operating 2.0
Firstcash, Inc. 2.0
Welltec A/S 2.0
Alliance Data Systems Corporation 1.9
Nathan'S Famous, Inc. 1.9
Teva Pharmaceuticals Financial Company B.V. 1.8
First Tennessee Bank 1.8
Twitter, Inc. 1.8
Total as % of Net Assets 19.8

This is presented as supplemental information.

Sector Allocation3 as of September 30, 2020

High Yield Composite ICE BofA U.S. High Yield Index
Corporate Bonds 95.8 100.0
Retail 12.8 5.0
Energy 12.0 13.0
Leisure 10.9 5.9
Financial Services 10.2 4.3
Services 5.3 4.4
Healthcare 5.2 9.1
Consumer Goods 5.1 5.1
Real Estate 4.6 4.0
Basic Industry 4.3 10.0
Banking 4.3 1.3
Insurance 4.0 1.0
Technology & Electronics 3.9 4.9
Media 3.6 9.3
Automotive 3.5 5.2
Telecom 3.1 6.8
Transportation 1.6 1.4
Capital Goods 1.5 6.6
Utility 0.0 2.6
Securitized 0.6 0.0
Cash & Other 3.6 0.0

This is presented as supplemental information.

Credit Quality4 as of September 30, 2020

Quality Rating % of Portfolio
Investment Grade 12.1
BB 44.1
B 33.7
CCC & Lower 5.6
Not Rated 4.5

This is presented as supplemental information.

Documents

Relative to the ICE BofA U.S. High Yield Index.

Cash & Other may include cash, treasuries, money market funds, and short duration fixed income funds.

Investment Grade is a Bond Quality Rating of AAA, AA, A or BBB. Security quality ratings are derived from underlying portfolio securities by using the middle rating of Standard & Poor’s, Moody’s, and Fitch. If only two of Standard & Poor’s, Moody’s, and Fitch rates a security the higher of the two is selected. If only one of Standard & Poor’s, Moody’s, and Fitch rates a security the available rating is used. For securities that are not rated by Standard & Poor’s, Moody’s, or Fitch a rating from a secondary Nationally Recognized Statistical Rating Organization (“NRSRO”) may be used. Ratings by any agency represent an opinion only, not a recommendation to buy or sell. Securities that are not rated by any agencies are reflected as Not Rated “NR.”

Source ICE Data Indices, LLC (“ICE Data”), is used with permission. ICE Data, its affiliates and their respective third party suppliers disclaim any and all warranties and representations, express and/or implied, including any warranties of merchantability or fitness for a particular purpose or use, including the indices, index data and any data included in, related to, or derived therefrom. Neither ICE Data, its affiliates or their respective third party providers shall not be subject to any damages or liability with respect to the adequacy, accuracy, timeliness or completeness of the indices or the index data or any component thereof, and the indices and index data and all components thereof are provided on an “as is” basis and your use is at your own risk. ICE Data, its affiliates and their respective third party suppliers do not sponsor, endorse, or recommend Diamond Hill Capital Management, Inc., or any of its products or services.