Against The Grain: SCM Ups Its HY Bond Exposure
Source: Bank Loan Report - November 3, 2008
November 2008

An article in The Bank Loan Report highlighted the reasons behind SCM's tactical move to increase its exposure to high yield and high grade bonds.

At a time when many high yield fund are unwinding, SCM Advisors is actually increasing its exposure to high yield and high grade bond holdings in two of its portfolios.

“It’s a tactical trade more than anything else,” said Robert Bishop, a portfolio manager with SCM. “Longer term into 2009, we’re still concerned about the weakness of the economy. What we’re focused on is the fact that we’ve had a technical global deleveraging of risk markets, and people are selling for reasons other than valuation. ...[Bonds] clearly have been under a lot of technical pressure.”

This move is not simply prompted by low prices, but by a belief that a rebound in the markets will be helped by government bailout efforts:

“If it was all about being cheaper than it was before, that does not necessarily make a good value,” he said. “We’re going to start to see a rally by the end of the year due to massive intervention by governments across the world.”

Source: Bank Loan Report