High Yield

Description

Fountain Capital Management, L.L.C. (Fountain) is an independently managed investment advisor (an affiliate of Atlantic) that specializes in the management of non-investment grade credits.

Fountain’s Total Return High Yield strategy invests in the non-investment grade sector of the corporate bond market. The objective of this strategy is to maximize total return while limiting risk by concentrating on the middle to higher credit quality sectors of the high yield universe.

Philosophy

Fountain believes investing in the bonds of companies with improving credit fundamentals in growing industries allows them to experience more upgrades and fewer downgrades than the market. Over a full market cycle this strategy is designed to capture excess return with lower than market volatility.

Investment Process

Sector Selection

A top-down approach is used to identify and overweight industries with the highest and most sustainable growth prospects and conversely to underweight or avoid industries where there is a higher risk of downgrades and defaults.

Security Selection

Fountain uses a bottom-up approach to identify companies within favored industries that have strong free cash flow; established debt service records; and asset values well above debt levels. Only bonds that are rated at least B3/B- by either Moody’s or S&P are purchased.

Research

Fountain analysts perform all credit research in-house. Each analyst is responsible for specific industry coverage.

Sell Discipline

It takes a unanimous vote of the investment committee to establish a position, and only one committee member’s vote to sell. Sales typically occur when analysts identify the deterioration of credit fundamentals, management or management philosophy change, or the security becomes overvalued.

Benchmark

Various High Yield Market Indices are relevant, including those of Merrill Lynch and Citigroup.

Portfolio Duration

The portfolio duration target is generally maintained within a half year of the benchmark.

Minimum Account Size

Separate account: $20,000,000, which may be changed at Fountain’s discretion.

Commingled fund: $1,000,000, which may be changed at Fountain’s discretion.

In addition to the product featured herein, Fountain offers Short Duration High Yield management.

Footnotes

Past performance is no guarantee of future results. No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission. Information has been obtained from sources believed to be reliable but not guaranteed. All investments managed by Atlantic, its affiliates or otherwise described herein entail risks. Please see the “Terms of Use” page of our website for important information and disclosures relating to this website and our services. This is not a recommendation or offer of any particular security, strategy or investment product, but is distributed for educational purposes only.