The strategy offers the potential to generate competitive total return from both income and capital appreciation by tactically managing exposure to floating rate bank loans and high yield bonds (0%-100% in either asset class). Interest rate risk is limited by keeping duration at three years or less. The flexible credit team employs a relative value approach centered on fundamental analysis, loss avoidance, diversification, and active management.
Step 1: Top-Down Sector and Industry Analysis
- Relative value determines the allocation between bank loans and high yield bonds
- Indusry bias and analysis such as competition, industry cycle, secular trends, and relative value determine industry positioning
- Formal monthly Newfleet multi-sector meetings strengthen decision-making
Step 2: Bottom-Up Security Selection
- Perform in-depth fundamental credit analyses including business drivers, financial analysis, management experience, capital markets access, liquidity, and enterprise value
- Look for companies with a competative advantage, sustainable capital structure, stable cash flow, and a bias to deleverage
- Coverge of both loans and high yield allows for determination of best risk-adjusted relative value within the capital structure
Step 3: Portfolio Construction, Opportunistic Trading, and Oversight
- Construct diversified portfolios across credit ratings, capital structure, issuers, and industries
- Dedicated traders actively take advantage of mispricings, market dislocations, and special situations
- Constant evaluation using technology, proprietary credit monitoring tools and research database provides early detection of potentially deteriorating credits or profitable trading opportunities
Documents
Portfolio Managers
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David Albrycht, CFA
President and Chief Investment OfficerDavid Albrycht, CFA, is president and chief investment officer of Newfleet Asset Management. Mr. Albrycht is the senior portfolio manager of several multi-sector fixed income strategies, some dating back to the early 1990s. In his role as CIO, Mr. Albrycht drives top-down strategy for Newfleet’s investment platform, which includes multi-sector and dedicated sector strategies for high yield, bank loans, and flexible credit. In addition to managing mutual funds and variable investment options in these strategies, Mr. Albrycht is co-manager of two closed-end funds, Virtus Total Return Fund Inc. (NYSE: ZTR) and Virtus Global Multi-Sector Income Fund (NYSE: VGI). He also is co-manager of three exchange traded funds, AdvisorShares Newfleet Multi-Sector Income ETF (NYSE: MINC), Virtus Newfleet Multi-Sector Bond ETF (NYSE: NFLT), and Virtus Newfleet Dynamic Credit ETF (NYSE: BLHY), and two offshore funds, the Virtus GF Multi-Sector Short Duration Bond Fund and the Virtus GF Multi-Sector Income Fund. Additionally, Mr. Albrycht is responsible for the structuring and management of Newfleet’s CLO platform.
Prior to joining Newfleet in 2011, Mr. Albrycht was executive managing director and senior portfolio manager with Goodwin Capital Advisers, a former investment management subsidiary of Newfleet’s parent, Virtus Investment Partners. Prior to that role, Mr. Albrycht was director of credit research at Goodwin’s predecessor, Phoenix Investment Counsel (PIC). In addition, he managed the Phoenix MISTIC CDO, a $1 billion multi-sector collateralized debt obligation, for which he was responsible for credit analysis and deal structure. He joined the PIC multi-sector fixed income team in 1985 as a credit analyst and has managed fixed income portfolios since 1991.
Mr. Albrycht earned a B.A., cum laude, from Central Connecticut State University and an M.B.A., with honors, from the University of Connecticut. He is a CFA® (Chartered Financial Analyst®) charterholder. He began his career in the investment industry in 1985.
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Francesco Ossino
Senior Managing Director, Senior Portfolio Manager, and Bank Loan Sector HeadIndustry start date: 1996
Francesco Ossino
Senior Managing Director, Senior Portfolio Manager, and Bank Loan Sector HeadFrank Ossino is a senior managing director, senior portfolio manager, and sector head of the bank loan asset class at Newfleet Asset Management. Mr. Ossino serves as a portfolio manager of Newfleet’s Floating Rate Bank Loan and Flexible Credit strategies through a number of subadvisory relationships. Additionally, Mr. Ossino is responsible for the structuring and management of Newfleet’s CLO platform.
Prior to joining Virtus in 2012, Mr. Ossino was a portfolio manager at Hartford Investment Management Company (2004-2011) and Hartford Funds subadviser Wellington Management (2012), where he managed mutual funds focused on bank loans and a commingled bank loan portfolio for institutional investors. Previously, he held a variety of credit analyst and portfolio management positions at CIGNA (2002-2004), HVB Bank (2000-2002), and FleetBoston Financial (1996-2000).
Mr. Ossino earned his M.S. in international economics and finance from Brandeis University and Luigi Bocconi University in Milan, Italy and a B.S. in economics, cum laude, from Brandeis University. He began his career in the investment industry in 1996.
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Eric Hess, CFA
Managing Director, Portfolio Manager, and High Yield Sector HeadIndustry start date: 2006
Eric Hess, CFA
Managing Director, Portfolio Manager, and High Yield Sector HeadEric Hess is a managing director and portfolio manager at Newfleet Asset Management and sector head of high yield credit. He is also responsible for credit research of the energy sector. In addition, Mr. Hess is co-portfolio manager of the Newfleet High Yield and Flexible Credit strategies through a number of subadvisory relationships.
Prior to joining Newfleet in 2011, Mr. Hess was on the fixed income team at Goodwin Capital Advisers. He joined Goodwin Capital’s corporate credit research group in 2010. Previous to joining Goodwin, he was a credit analyst for The Travelers Companies.
Mr. Hess earned a B.B.A. in finance from the University of Notre Dame, and he is a CFA® (Chartered Financial Analyst®) charterholder. He began his career in the investment industry in 2006.
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William Eastwood, CFA
Senior Managing Director, Portfolio Manager, and Head of TradingIndustry start date: 1995
William Eastwood, CFA
Senior Managing Director, Portfolio Manager, and Head of TradingWilliam Eastwood is a senior managing director, portfolio manager, and head of trading at Newfleet Asset Management with trading responsibilities primarily for leveraged finance. In addition, Mr. Eastwood is co-portfolio manager of the Newfleet High Yield and Flexible Credit strategies through a number of subadvisory relationships.
Mr. Eastwood joined Newfleet in 2011 as a senior fixed income trader. Prior to joining Newfleet, he served as a senior fixed income trader at several firms, including Neuberger Berman, PPM America, and Phoenix Investment Counsel.
Mr. Eastwood earned a B.S. in finance from Post University and an M.B.A. from the University of Hartford. He is a CFA® (Chartered Financial Analyst®) charterholder. He began his career in the investment industry in 1995.
Important risk considerations
- Credit & Interest: Debt securities are subject to various risks, the most prominent of which are credit and interest rate risk. The issuer of a debt security may fail to make interest and/or principal payments. Values of debt securities may rise or fall in response to changes in interest rates, and this risk may be enhanced with longer-term maturities.
- Bank Loans: Loans may be unsecured or not fully collateralized, may be subject to restrictions on resale and/or trade infrequently on the secondary market. Loans can carry significant credit and call risk, can be difficult to value and have longer settlement times than other investments, which can make loans relatively illiquid at times.
- High Yield-High Risk Fixed Income Securities: There is a greater level of credit risk and price volatility involved with high yield securities than investment grade securities.
- ABS/MBS: Changes in interest rates can cause both extension and prepayment risks for asset- and mortgage-backed securities. These securities are also subject to risks associated with the repayment of underlying collateral.
- Foreign & Emerging Markets: Investing internationally, especially in emerging markets, involves additional risks such as currency, political, accounting, economic, and market risk.