US High
Yield Credit
Focusing on fundamental quality
Reasons to invest
High income
Business quality advantage
Relative value
Track record
ESG integration

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.
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
Our methodology is defined by the meticulous research we conduct for each issuer. The investable universe consists of all high-yield bonds rated between BB and CCC with at least $200m of issuance.
Research involves:
- Extensive meetings with senior management
- Historical analysis of an issuer’s business
- Analysis of the issuer’s industry
- A profile of its financial position, honing in on the sources and uses of cash
- We look for companies with niche products, pricing power and dominant market shares, preferring industries and companies that have predictable and consistent earnings profiles.
- We incorporate ESG analysis and assess the company’s management.
- Our analysts then construct financial models, assessing past performance in terms of growth rates and margins. We focus on the company’s ability to generate free cash-flow through its operating cycle and identify the relevant calls on that free cash-flow.
- Companies with strong business models that employ an aggressive financial strategy are preferable to companies with weak business profiles and a strong current financial profile.
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

Lead Manager

Mark E Durbiano, CFA, MBA
Senior Vice President, Senior Portfolio Manager
Product information
For the latest performance and vital information – including prices, key facts, identifiers and ratings
Our Purpose
To deliver Sustainable Wealth Creation
Like all our investment capabilities, Federated Hermes US High Yield Credit aims to deliver Sustainable Wealth Creation: the generation of wealth through investments that enrich investors, society and the environment over the long term.
Our business provides three equally powerful pathways to achieving this aim. Federated Hermes US High Yield Credit features in the Active ESG route.
Responsible, active investing for long-term performance.
- Financial objective
- Best-practice integration of ESG analysis and engagement insights
- Some capabilities may enforce exclusions that reflect Portfolio Managers’ investment views
- Delivery of sustainable outcomes through effective stewardship
Federated Hermes
US High Yield Credit
Thematic and values-based approaches for sustainable outcomes.
- Financial and sustainability objectives
- Best-practice integration of ESG analysis and engagement insights
- Exposure to sustainability themes
- Exposure to ESG leaders and industry exclusions that reflect sustainability values
- Delivery of sustainable outcomes through effective stewardship
Mission-led investment strategies to create positive impact.
- Financial and impact objectives
- Best-practice integration of ESG analysis and engagement insights
- Focus on companies generating impact or undergoing positive transformation
- Some capabilities may enforce exclusions that reflect defined sustainability values, impact considerations, or both
- Delivery of sustainable outcomes through effective stewardship