Aside from the overall view, portfolio managers at Highland have made a notable effort to align their interests with shareholders' by taking a personal stake and investing alongside them. Nearly 33% of the firm’s assets are represented by a manager who invests in their respective product. Open-end and exchange-traded fund fees are a weakness at the firm, contributing negatively to the rating. On average, the firm charges fees on its funds that are in the second most-expensive quintile of category peers. With the current market environment of fee compression, this is cause for concern, as investors may flock to alternate asset managers over time to get a better deal. A sign of strength at Highland is its longest-tenured management, which boasts an average asset-weighted tenure of 14 years at the firm. This accumulation of experience builds confidence that the group can navigate a variety of market environments adeptly.
Can Floating-Rate Funds Offset the Risks From Rising Interest Rates?
While these loans pay out more to investors when rates rise, their chances of going into default increase during a recession.