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.

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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

6027
Mark Durbiano

Mark E Durbiano, CFA, MBA

Senior Vice President, Senior Portfolio Manager

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Insights

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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.

Active ESG on blue background

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

Sustainable on green background

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
Impact on orange background

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