NISA’s high yield management strategies can provide a materially different approach for investors seeking alpha.

We often see high yield overlooked as an asset class, but we believe it can play a valuable role in investor portfolios across a wide range of risk and return objectives. NISA believes high yield combines equity and fixed income attributes and can provide a potential source of alpha generation for investors.

NISA’s approach to high yield active management constructs portfolios to manage the higher transaction costs and lower liquidity associated with the high yield market. Our disciplined approach seeks to target meaningful enhancements relative to the benchmark and includes the following key characteristics:

• Maintaining liquidity within portfolios to seek to capitalize on opportunities and dislocations created by market structure and investor constraints, particularly during periods of market stress
• Targeting highly compensated, durable risk premiums to create a repeatable process for potential alpha generation

Aligning with NISA’s active management philosophy across markets, enhancement opportunities predominantly use securities consistent with the underlying benchmark. Portfolios maintain similar overall risk characteristics to the benchmark and seek to generate alpha while maintaining a credit quality that is similar to or better than the benchmark.

Market-based risks include potential default losses, changes in prevailing spread levels, and interest rate risk. Counterparty risk could include a counterparty default, where a loss on uncollateralized mark-to-market could be incurred by the client and new positions would need to be put in place to maintain exposure. Instrument liquidity risk could impact the ability to implement trades or could increase the transaction costs associated with trades.