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CrossingBridge Low Duration High Yield Fund to change name and changes to investment strategies
Expanding the strategy beyond HY to include preferreds, equities (SPACs), private credits, foreign credits.
"The income producing fixed income securities in which the Fund invests include: bills, notes, bonds, debentures, convertible bonds, bank loans, loan participations, mortgage- and asset-backed securities, Rule 144A fixed income securities, zero coupon securities, syndicated loan assignments, sovereign debt and other evidence of indebtedness issued by U.S. or foreign corporations, governments, government agencies or government instrumentalities, including floating-rate securities (i.e., fixed income securities that provide income that can increase or decrease with interest rates), commercial paper, and preferred stocks. The Fund may also invest in fixed income-like equity securities such as special purpose acquisition companies (“SPACs”) that provide interest income and/or the potential for capital appreciation while having an effective maturity. The Fund invests in individual fixed income securities without restriction as to issuer credit quality, capitalization or security maturity. The Fund may invest up to 100% of its assets in lower-quality fixed income securities — commonly known as “high yield” or “junk” bonds."
...will construct a portfolio for the Fund that the Adviser believes has the potential to generate a high level of current income, while maintaining a fixed income portfolio duration of 2.0 or less.
Here is the old section:
The Fund typically focuses on instruments that have short durations (i.e., have an expected duration of three years or less from the time of purchase through maturity, call, or corporate action).
FWIW His " Pre Merger Spac " ETF SPC has been a somewhat low yielding ( 4% last year) steady eddy for over three years now. They aim to buy SPACs that have lots of cash before a merger and if there is no merger before the timeline the cash has to returned
I would have thought most SPACS would have been merged or closed by now but guess not
I think the change in investment strategy allows the manager "to invest" in SPACS; it does not mean the manager has to invest in SPACs. Not all SPACs are successful...
Good call, Balu! David is on retreat in Maine, alternately hanging with and learning from other A-tier investors. We had a pleasant but brief call just now.
The short version: they are renaming in response to evolving guidance from the SEC about naming, and in recognition of the fact that the fund has traditionally been a multi-sector vehicle (one of the reasons for hiring a high-yield specialist that is they know when more high yield is not serving their investors). Historically the fund doesn't exceed about two-thirds in high yield, and Morningstar already recognizes it as multi-sector. He agrees that that assignment is fair.
The name change reflects those two factors. David was clear that it does not reflect any change to what they do or how they do it.
I'm not worried about the fund investing in SPACS at all if that is where DS finds value. I've held SPC for over 2 years in my conservative withdrawal bucket and have found it to be a low volatility, steady eddy, positive trending ETF (5% 1Y return as of 7/31). If Mr. Sherman can find value in using SPACs to enhance return in CBLDX, I'm all for it. I might, though, sell my slug of SPC and add that money to my existing CBLDX position and let David decide on the fund's positions and use of SPACs.
I do not own the fund and have not looked up the fund anywhere. I was only guessing based on the write ups in the posts. I would say posters did a good job.
Comments
"The income producing fixed income securities in which the Fund invests include: bills, notes, bonds, debentures, convertible bonds, bank loans, loan participations, mortgage- and asset-backed securities, Rule 144A fixed income securities, zero coupon securities, syndicated loan assignments, sovereign debt and other evidence of indebtedness issued by U.S. or foreign corporations, governments, government agencies or government instrumentalities, including floating-rate securities (i.e., fixed income securities that provide income that can increase or decrease with interest rates), commercial paper, and preferred stocks. The Fund may also invest in fixed income-like equity securities such as special purpose acquisition companies (“SPACs”) that provide interest income and/or the potential for capital appreciation while having an effective maturity. The Fund invests in individual fixed income securities without restriction as to issuer credit quality, capitalization or security maturity. The Fund may invest up to 100% of its assets in lower-quality fixed income securities — commonly known as “high yield” or “junk” bonds."
...will construct a portfolio for the Fund that the Adviser believes has the potential to generate a high level of current income, while maintaining a fixed income portfolio duration of 2.0 or less.
Here is the old section:
The Fund typically focuses on instruments that have short durations (i.e., have
an expected duration of three years or less from the time of purchase through maturity, call, or corporate action).
https://info.crossingbridgefunds.com/hubfs/Regulatory/CrossingBridge_Prospectus.pdf?v=1723830514184
I would have thought most SPACS would have been merged or closed by now but guess not
The short version: they are renaming in response to evolving guidance from the SEC about naming, and in recognition of the fact that the fund has traditionally been a multi-sector vehicle (one of the reasons for hiring a high-yield specialist that is they know when more high yield is not serving their investors). Historically the fund doesn't exceed about two-thirds in high yield, and Morningstar already recognizes it as multi-sector. He agrees that that assignment is fair.
The name change reflects those two factors. David was clear that it does not reflect any change to what they do or how they do it.
Does that help?
I do not own the fund and have not looked up the fund anywhere. I was only guessing based on the write ups in the posts. I would say posters did a good job.
https://www.sec.gov/Archives/edgar/data/1141819/000089418924004910/crossingbridgesupplementna.htm