Higher Return Potential

The fund seeks to enhance returns by augmenting its portfolio of high-yield bonds with an opportunistic allocation of up to 20% in public stocks of high-yield companies. When market conditions warrant, the equity allocation has the potential to generate higher returns, particularly in low-rate, low-yield environments. However, the fund is not required to have an equity weighting.

Managers’ High-Yield Skill Set Delivers a Distinct Advantage

The comprehensive, bottom-up fundamental analysis used to select and manage the fund’s high-yield bonds is also applied when selecting stocks. In most cases, the fund is already invested in the bonds of companies for which it is considering equity allocations. As a result, fund managers have a uniquely in-depth understanding of each company’s entire capital structure and overall quality, supporting their ability to identify undervalued stocks.

Time-Tested Investment Process

Federated’s high-yield investment process is the fund’s foundation, guiding the selection of high-yield securities that make up at least 80% of the fund’s holdings. A hallmark of this process involves the meticulous evaluation of each company’s fundamentals, weighing risk first and reward second. The fund’s stock selection is a natural extension of this process, resulting in the equity portfolio’s track record of outperformance in both up and down markets.


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