Oaktree views high yield bond investing as the conscious bearing of risk for profit. We believe that default risk, while present, is often exaggerated in the marketplace, so that the additional interest offered by lower quality bonds more than compensates for the actual risk. Our defensive, credit-intensive strategy is designed to produce above average results, limit risk and, especially, strive for superior results in bad times.

"Our conservatism may cause us to forgo peak returns in good times, but it helps us avoid many of the problems that arise in bad times," says Sheldon Stone, portfolio manager for U.S. High Yield Bonds.

We focus exclusively on the debt of solvent U.S. and Canadian corporations and emphasize senior, cash paying securities and thorough diversification. We avoid exotic market sectors like emerging nation debt, which could offer high returns but with much greater risk. Our disciplined credit research approach leads us to be highly selective in our investments, avoiding companies whose creditworthiness is likely to decline. In employing this approach since 1986, the resulting long-term returns have been

• high in the absolute,
• well above average among high yield bond managers, particularly in bad times,
• vastly superior to the returns on high grade bonds, and
• marked by relative stability.

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