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RidgeWorth Seix Floating Rate High Income Fund - 1st Quarter 2016

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Episode Transcript

RidgeWorth: Welcome to RidgeWorth Investments Fund Podcast Series. It’s April 11th and we’re speaking with George Goudelias, of Seix Investment Advisors, subadviser to the RidgeWorth Seix Floating Rate High Income Fund. George, how did the leveraged loan market perform in the first quarter?

Goudelias: After a slow start, the loan market finished the quarter very strongly, so after negative returns in both January and February, March was a very strong month, so for the quarter, the loan market returned 1.37%.

RidgeWorth: What added to or detracted from performance? 

Goudelias: The primary contributors in the quarter were names that had sold off in the fourth quarter of last year and rebounded well, so these are names primarily in the telecom space, the media space as well as gaming and metals and mining. Detractors for the quarter were several names that we didn’t own or were underweight and essentially they performed well, so ultimately those names detracted somewhat from performance and then a couple of other, more technology-related names that had soft earnings and sold off a bit during the quarter.

RidgeWorth: Has the market recovered from the risk-averse environment that prevailed at the end of 2015?

Goudelias: Yeah, I would say it has recovered. That risk-averse environment in the fourth quarter did continue into the first two months of this year, thus contributing to the negative returns in those two months. But as we entered March, performance for the loan market definitely turned around as we have more signs of global stability. And that has continued beyond the first quarter as well.

RidgeWorth: How does the supply-demand dynamic look heading into the second quarter?

Goudelias: On the demand side, I’d say that, you know, CLO (collateralized loan obligation) creation which had been very slow in January and February has rebounded quite a bit here in March. I think we have seen a fair amount of new issuance, but all in all, I would say that demand is somewhat out-stripping supply over the last four weeks of the quarter, so that sets up well for the loan market as we head into the second quarter. 

RidgeWorth: What opportunities are you finding in the leveraged loan market?

Goudelias: Right now, we are finding select opportunities in the gaming sector – these are primarily operators who have some Las Vegas exposure, but also have a regional exposure in the Northeast, as well as the South. We are finding some opportunities in the technology space, and these are really high-quality names that have sold off in January and February of this year. And then we are finding select opportunities in retail as well as the chemical space.

RidgeWorth: What’s your outlook for the market for the second quarter?

Goudelias: We remain constructive, I know, I’d say that, you know, the loan market has continued its positive sentiment as we entered the second quarter, so I would expect, a similar type of environment, not as robust as March, for that to continue, but ultimately I think we’ll see positive returns for the quarter, just based on the technicals that are in the market as it relates to supply and demand as well as being constructive on earnings and what we’ve seen so far as well as the rebound that we’ve seen in energy.

RidgeWorth: Thanks so much for your time today, George.

Goudelias: Thanks very much.

DISCLOSURES: A collateralized loan obligation (CLO) is a security backed by a pool of debt, often low-rated corporate loans. All investments involve risk. Comments and general market related projections are based on information available at the time, are for informational purposes only, are not intended as individual or specific advice, may not represent the opinions of the entire firm and may not be relied upon for individual investing purposes. Information provided is general and educational in nature, provided as general guidance on the subject covered and is not intended to be authoritative. All information contained herein is believed to be correct but accuracy cannot be guaranteed. This information may coincide or conflict with activities of the portfolio managers. It is not intended to be and should not be construed as investment, legal, estate planning or tax advice. RidgeWorth does not provide legal, estate planning, or tax advice. Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher quality bonds generally offer less risk than longer term bonds and a lower rate of return. Generally, a fund’s fixed income securities will decrease in value if interest rates rise and vice versa. Although a fund's yield may be higher than that of fixed income funds that purchase higher rated securities, the potentially higher yield is a function of the greater risk of that fund’s underlying securities. Floating rate loans are typically senior and secured, in contrast to other below-investment grade securities. However, there is no guarantee that the value of the collateral will not decline, causing a loan to be substantially unsecured. Loans generally are subject to restrictions on resale. Certain types of loans may limit the ability of a fund to enforce its rights and may involve assuming additional credit risks. Past performance is not indicative of future results. For performance data current to the most recent month end visit our website at www.ridgeworth.com. Before investing, investors should carefully read the prospectus or summary prospectus and consider the fund’s investment objectives, risks, charges and expenses. Please call 888.784.3863 or visit ridgeworth.com to obtain a prospectus or summary prospectus, which contains this and other information about the funds. ©2016 RidgeWorth Investments. All rights reserved. RidgeWorth Investments is the trade name for RidgeWorth Capital Management LLC, an investment adviser registered with the SEC and the adviser to the RidgeWorth Funds. RidgeWorth Funds are distributed by RidgeWorth Distributors LLC, which is not affiliated with the adviser. All third party marks are the property of their respective owners. Seix Investment Advisors LLC is a registered investment adviser with the SEC and a member of the RidgeWorth Capital Management LLC network of investment firms.

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