Ranking fourth for the year is Franklin Templeton Investments' global high-yield strategy, with a gross return oTempleton Investments' global high-yield strategy, with a gross return of 12.6%.
Eric Takaha, San Mateo, Calif.-based senior vice president and director of corporates and high yield at Franklin Templeton, said in a telephone interview that an emphasis on research is behind the success of the stTempleton, said in a telephone interview that an emphasis on research is behind the success of the strategy.
“We have a large group of internal research analysts that drive our process,” said Mr. Takaha. “Security selection is driven by the recommendations by our in-house analysts.”
The research-based approach capitalizes on dislocations in high-yield fixed income and features exposure to the U.S., the U.K. and the eurozone with a broad spectrum of quality.
Higher beta, low defaults and high exposure to energy have helped as well.
“If you look over the past year in general, some of the higher beta, a bit more of the aggressive portion of the high-yield markets has been successful,” Mr. Takaha said.
“We had a bit of a higher beta at the start of 2013, and that certainly provided some good relative performance in the first part of the year.”
Also, “defaults have been pretty good given all the refinancing that has gone on in the past three or four years,” he said.
Ranking fifth was Shenkman Capital Management Inc.'s multistrategy separate account with a gross return of 11.84% for the year ended March 31.
The New York-based firm is a research-intensive, bottom-up fundamental credit shop that relies on proprietary analytical tools rather than ratings agencies to valuate the creditworthiness of a company, said Nicholas Keyes, senior vice president, principal and director of new business development,
This separate account is designed to be an unconstrained multisector fixed-income strategy that can generate positive returns, according to Mr. Keyes.
Justin W. Slatky, principal and senior portfolio manager at Shenkman Capital, said the strategy brings together “bank loans, high-yield bonds, convertibles and what we refer to as opportunistic credit.”
The lead portfolio managers of the four areas meet on a quarterly basis to allocate the capital among them. Performance in the past year was primarily driven by second liens within bank loans as well as convertibles.
Going into 2014, the product areas are more evenly distributed within the strategy, Mr. Slatky said. “Of the asset classes, we're probably most concerned about the second-lien market given the rally we've seen in credit, and given the risk rally we're seeing a bit of a risk-loving appetite,” Mr. Slatky said.
For the five years ended March 31, ranking second after WAMCO's U.S. index-plus strategy was Manulife Asset Management North America Ltd.'s U.S. high-yield fixed-income strategy, with a gross annualized return of 24.53%.
The median return for the five years ended March 31 for overall fixed-income strategies was an annualized 6.23%, while the Barclays Capital Government/Credit index returned 17.46%.
For collective investment trusts, J.P. Morgan Asset Management's distressed debt opportunities fund led the way with a net return of 21.09% for the year ended March 31, followed by Shenkman Capital Management's Four Points multistrategy collective investment trust, which had a 10.83% net return.
The median return for overall fixed-income collective investment trusts for the year ended March 31 was 0.4%, while the five-year median return was 5.52%.