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Investment Approach

The objective of the Columbia Short Duration High Yield Fixed Income strategy is to generate high current income with limited volatility resulting from interest rate and/or default risk. The strategy leverages the same independent credit research and proprietary risk rating system that supports the Columbia Management traditional high yield strategies, but focuses primarily on BB and Single-B rated high yield bonds and loans with maturities of zero to three years. The strategy may also opportunistically invest in investment grade corporate bonds and CCC-rated corporate bonds. The Team believes that default risk can be substantially reduced through rigorous, fundamental, independent credit research and a focus on the higher quality, short-dated portion of the high yield market. Investors may benefit from high current income and protection from rising rates resulting in strong absolute returns across various market environments.

Distinguishing Features

  • Offers high current income with less volatility than other fixed income alternatives
  • Provides the potential for strong absolute returns in various market environments
  • Rigorous, independent proprietary credit research produced by a team of dedicated high yield career analysts
  • May perform as well or better than the broad high yield market in a sub-coupon return environment, but with a fraction of the volatility
  • May be especially attractive in low interest rate environments where high yielding alternatives are scarce and also exhibits less sensitivity to interest rate changes relative to other fixed income strategies

Invesetment Process

Rigorous bottom-up fundamental credit research
  • Strong and independent research is the cornerstone of our process
  • Proprietary risk and relative value rating system
Investment Discipline
  • The risk profile of the short duration high yield universe can change meaningfully and it is critical to manage within established risk control guidelines regardless of the changing risk profile of the universe
Portfolio Construction
  • Experienced and dedicated portfolio managers and analysts are full partners in the portfolio construction and monitoring process
  • Relative value decisions are made to trade off risk and reward to optimize portfolio positioning
Constant focus on downside risk
  • Given the lower yields within the short duration high yield universe, downside risk management is even more critical as it is more difficult to make up for losses
  • Dynamic position management according to proprietary risk and relative value ratings