CrossingBridge Low Duration High Yield launched on February 1, 2018. The fund seeks “high current income and capital appreciation consistent with the preservation of capital.” The plan is to invest in junk bonds and loans, mostly CCC or better. Their investable universe includes corporate bonds, zero-coupon bonds, commercial paper, ETNs, distressed debt securities, bank loan assignments and/or participations, private placements, mortgage- and asset-backed securities, U.S. Government obligations and bank loans to corporate borrowers. While most of the portfolio will be domestic, up to 25% might be foreign fixed-income securities. They’ll generally have a duration of three years or less. There’s also some (limited) ability to hedge the portfolio.
The adviser tends to invest around the notion of default risk: they invest in firms where the default risk appears minimal or where the issuer has already defaulted so they’re able to buy securities at huge discounts. They believe “that the combination of this fundamental analysis and the short duration characteristics of the securities result in a low volatility, absolute return risk profile.”
Why might you care?
CrossingBridge is an affiliate Cohanzick Management, sub-adviser to two exceptionally excellent and distinctive fixed-income funds. They are RiverPark Short Term High Yield (RPHYX/RPHIX) and RiverPark Strategic Income (RSIVX/RSIIX). RPHYX, in particular, has posted an exceptional risk-return profile: it has the highest Sharpe ratio of any mutual fund (as in: #1 out of 7000+) over the past five years and 14th over the past three. The Strategic Income fund is a couple steps out on the risk-return spectrum, offering the prospect of high single digit returns with an aversion to losing money.
| Return | Best year | Median year | Worst year | Sharpe | Maximum drawdown | Duration (years) | Beta* | |
| RPHIX | 2.4% | 4.4% | 3.45% | 1.2% | 3.08 | -0.6 | 0.2 -3 | 0.04 |
| RSIIX | 3.6% | 10.2 | 4.5% | (3.8%) | 1.08 | -7.3 | 2-4 | 0.14 |
* relative to the BarCap Aggregate
CrossingBridge seems to be positioned in between the two older funds, offering the potential for more substantial returns than RPHIX with less downside than RSIIX.
Like the RiverPark funds, CrossingBridge is managed by David Sherman, Cohanzick’s founder, president and lead manager. In the case of CrossingBridge, Michael DeKler, a senior analyst at Cohanzick, serves as assistant portfolio manager.
For now, only the institutional share class is available to the public. It charges 0.99% with a $250,000 minimum. They are authorized to sell Investor shares with expenses of 1.27% and a $2500 minimum. No word yet on when that might occur. I’d share their website, but they don’t appear to have one.
We have profiled both Short Term High Yield and Strategic Income. By way of disclosure, I have personal investments in both though MFO has no financial ties to either RiverPark or Cohanzick.
