Bailey McCann, Opalesque New York:
Millstreet Capital Management has posted a positive quarterly return for its credit fund - Millstreet Credit Fund. The fund generated a net return of 3.99% for the quarter, and monthly returns of +1.34% net in April, +1.08% net in May, and +1.52% net in June. Year-to-date, the fund earned a net return of +8.58% according to an investor letter obtained by Opalesque.
Over the past twelve months, the fund is up +17.28%. Since inception, the fund’s returns have been +44.66% with a Sharpe ratio of 1.5.
The fund outperformed a handful of credit indices including the Citigroup High Yield Market Index, Credit Suisse Leveraged Loan Index, and HFRI RV: Fixed Income-Corporate Index, which averaged a return of 2.17% for the quarter.
On an exposure basis within the credit universe, fixed income saw broad based highs with emerging market bonds, investment grade bonds, and 10-year treasuries all posting returns above 2.5%. High Yield was also positive despite trailing fixed income investments.
The High Yield market is showing some resiliency, however, the market benefitted from the rally in 10-yrs. Stronger new homes and jobs data also bolstered returns even though GDP estimates were revised downwards. Yet, as spreads continue to widen, the letter notes that Millstreet is positioning itself away from the High Yield market. They have also steadily increased their hedges since the beginning of the year.
The firm sees greater oppor......................
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