Shorter & Sweeter
We would add that a separate account strategy has many advantages over an index or mutual fund focused on the space, as we can focus on lesser-known, and smaller tranches which go unnoticed by large mutual fund managers. We also enjoy the peace of mind that comes with owning the bonds outright in an individual account rather than a comingled fund – there is a lot to be said for holding a bond to maturity and knowing that the return of capital is in the immediate future, as opposed to being at the mercy of a fluctuating NAV. But as Gary Evans commented on our last post, “it really isn’t for any except the well-educated investor willing to do homework,” which is why we have a partner dedicated to short-term high-yield credit research. Don’t try this at home!