DNB High Yield Update September 2019

The DNB High Yield fund (Inst A NOK share class) returned 0,02% in August. As of September 10th the fund returned 6,07% to our investors which is fully in line with our expectations.

August performance +0,02% in NOK (Inst A NOK share class)
YTD return 6,07 % in NOK
EUR/NOK with strong movement

Svein Aage Aanes, Head of Fixed Income at DNB and Co-Portfolio manager of the High Yield fund, decided to launch a (Norway domiciled) HY fund in 2012. At this point in time DNB thought it might be a good idea to launch a dedicated High Yield fund as the Nordic HY market has grown over time. Today we think about the Nordic HY market as a fully established and well diversified market. Back in time the banks, brokers and market participants did their own credit research and every bond issued got a so called “shadow rating”.

Please find the development in EUR & NOK for other share classes below.

As many issuers are and were not willing to have a rating from an established rating agency we have now a situation where issuers with good credit qualities are still unrated. These companies are mostly recurring issuers and often strong brand names in the Nordic universe. This is a good opportunity for investors to buy a reasonable credit quality at higher spreads compared to rated issues in other markets, for example EU and US High Yield.

We launched the Luxembourg domiciled fund in November 2015 and gained a lot of attraction from our international clients. The Luxembourg domiciled fund has grown to 326m EUR and shows a very attractive track record. Since inception investors earned 6,38% annually in combination with a relatively low 3Y-volatility of 2,29%.

Please find details below:

As we are operating in a more and more diversified market which is still growing, we are not afraid of not finding enough interesting bonds for our strategies. At the moment the 71 bn. EUR sized market has a share of 8% in oil and gas service companies. We expect this part of the market to reduce to 5% over time.