US High
Yield Credit

Focusing on fundamental quality

Reasons to invest

High income

We pursue a high level of income by investing in below-investment-grade US corporate bonds.

Business quality advantage

We invest in companies with solid operating models that have the potential to deliver stable and predictable free cash-flow.

Relative value

Our team uncovers attractively priced opportunities from across the capital structures and quality spectrum of companies in the high yield universe.

Track record

Federated Hermes’ High Yield Fixed Income Strategy has delivered strong risk-adjusted returns since its inception in 1978.

ESG integration

We develop a proprietary ESG rating for each company in the portfolio based on discussions with company management, analysis of debt holder stewardship, external data sources and conversations with EOS, our leading stewardship team, This helps us mitigate risk and discover new opportunities.
Mark Durbiano

We believe that bottom-up fundamental analysis focusing on the quality of an issuer’s underlying business has the potential to generate competitive returns over time.

Mark E. Durbiano, CFA, MBA, - Senior Vice President, Senior Portfolio Manager

Why US High Yield Credit?

When Federated Hermes employs the term “quality”, we refer to the quality of an issuer’s underlying business – we find that ratings agencies tend to focus on leverage. We put a premium on a company’s ability to service debt through consistent and predictable free cash-flow generation, helping us build a more robust portfolio for clients.

The strategy is a true representation of the high yield market – we have no exposure to bank loans, emerging-market debt or derivatives, nor do we purchase equity securities. Meanwhile, Federated Hermes’ strategy has performed well through various, and sometimes violent, market cycles as we seek to limit risk in down-markets.

Our strategy is managed by an experienced and dedicated 14 person investment team with an average investment experience of more than 20 years. The strategy’s lead portfolio manager has been managing the strategy for over 44 years – all at Federated Hermes.

How we invest

Meticulous bottom-up research
Fundamental quality focus
Relative-value analysis

Investment Philosophy

We believe that bottom-up, fundamental analysis focusing on the underlying quality of an issuer’s business has the potential to generate competitive returns over time.

Investment Process

US High Yield Credit infographic

Lead Manager

Mark Durbiano

Mark E Durbiano, CFA, MBA

Senior Vice President, Senior Portfolio Manager

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