As a higher risk approach to high yield bonds, High Yield Plus makes use of more aggressive investment approaches and securities within the credit markets, including short sales, investment in special situations and the occasional use of leverage.

"We may purchase securities that have a higher risk profile, or that otherwise don't meet Oaktree's high yield bond guidelines," says Sloane Malecki, who manages the strategy along with George Leiva, under the direct supervision of Richard Masson and Tim Andrews. "We also consider stressed or distressed securities" Leiva adds, "that due to issue size or return characteristics may be inappropriate for Oaktree's distressed debt portfolios."

The types of special situations the strategy may utilize include:

• bridge and mezzanine loans, and private placements
• long/short paired trades designed to profit from mispricings between the securities of different companies in the same sector
• buying a company's senior bonds or bank debt, while shorting subordinated bonds of the same issuer, to take advantage of mispricings within a single debt structure, and
• debt/equity arbitrage that generally entails buying the fixed income security of a particular company and shorting or buying a put option on its stock.

The managers use leverage where they believe it will result in a more-than-commensurate return for bearing increased risk.

Click here for information regarding risk disclosures associated with the strategy.