The UCITS fund is the first product that is managed by the US-based Federated Hermes investment team, to be offered to our international client base. The Fund will be managed by Mark Durbiano, CFA, Senior Portfolio Manager at Federated Hermes, Inc. based in Pittsburgh, who has over 35 years of high-yield investing experience and is supported by a long-standing, 14-member team. The team already manages a Federated US High Yield portfolio with approximately $10.5 billion in assets under management and which has outperformed its benchmark in 12 of the last 16 years.
The Fund will aim to achieve strong, consistent performance within the high-yield market through bottom-up, fundamental analysis on the underlying quality of an issuer’s business. The process and philosophy of the Fund will focus on the quality of an issuer’s underlying business, combining in-depth qualitative and quantitative analysis to target companies with stable and predictable free cash flow.
The analysis of environmental, social and governance (ESG) factors will be integrated into the investment process to identify potential sources of tail risk. The team will also be engaging directly with the management teams of the companies they invest in, and drawing upon knowledge from EOS, Federated Hermes’ stewardship and engagement team, to gain a more comprehensive view of long-term structural ESG risks.
Mark Durbiano, CFA, Senior Portfolio Manager at Federated Hermes, said “Our approach to quality focuses on a company’s ability to service its debt, while a rating agency’s assessment of quality focuses on absolute leverage. We believe that this divergent approach creates an inefficient market and provides an opportunity to generate attractive excess and risk-adjusted returns.”
Harriet Steel, Head of Business Development at the international business of Federated Hermes, said “The launch of this Fund signifies the next stage of evolution for Federated Hermes. Together as a global firm we are able to leverage one another’s capabilities and distribution networks which has always been a key feature of the company’s growth strategy. This Fund meets an increasing client need for a high-income debt solution and is a welcome addition to our Credit capabilities.”