High-Yield Fund Still Strong After 2014 Manager Departure

Kenneth Oshodi: Andrew Susser and the team behind MainStay High Yield Corporate Bond have proven to be a capable group, and their continued strength after a 2014 manager departure has helped this fund to remain a strong offering.

Susser became a comanager on the portfolio in early 2013 and assumed lead manager responsibilities following the departure of longtime skipper Matthew Philo in June 2014. Susser is part of an experienced team at subadvisor MacKay Shields that includes eight sector-focused analysts. The team takes a bucketed approach to managing risk, and classifies companies into four groups based on financial strength, asset coverage, and consistency of cash flows. This aids the team in identifying asset-rich bargains during periods of market stress, like the 2015 high-yield sell-off.

The fund outperformed 70% of distinct high-yield bond Morningstar Category peers that year, despite significant exposure to the beaten-up energy sector. And after shifting into higher-yielding CCC and metals and mining names the following year, it had a strong showing in the March through December 2016 rally. This has helped the fund to be among the top quintile of performers during Susser's three-year tenure through May 31, 2017.

Affordable expenses, a strong team, effective process, and an impressive--though limited--record under Susser, lead to this fund's Morningstar Analyst Rating of Bronze.