How did US high yield bond managers fare in 2011?

Record inflows into high yield marked the end of 2011 with many managers arguing the asset class had become increasingly attractive in the face of growing mistrust in bonds issued by many Western governments.

A total of 42 managers ran US high yield bonds for the duration of 2011, so how did they fare?

Out of this pool of 42 managers, 38 (90%) ended the year in positive territory, with the average manager returning 2.38%.

Top performers

Leading the pack was Thomas Flannery, manager of the Credit Suisse Bond Fund (Lux) High Yield. The New York-based manager returned 9.43% with a main focus on bonds with a B credit rating, which currently account for 55% of his allocation by credit rating.

The Luxembourg-domiciled fund has a penchant for industrial bonds, which comprise 81% of allocation by asset class. And, his largest individual stock holding is offshore natural gas and oil company McMoRan Exploration.

Flannery, who took over management of the fund in April 2010, has 215 holdings in the fund, with an average maturity of 6.19 years.

In second place over the year was the duo of Niklas Nordenfelt and Philip Susser, who returned 4.46% while running the Wells Fargo (Lux) Worldwide Fund US High Yield Bond fund. The pair has co-managed the $81 million fund since its launch in April 2008.

The main maturity sought by the pair is 5-10 years, which accounts for 59.45% of the fund. It is also overweight in B-rated securities (49.1%), while holding an underweight position in Ba (26%), both relative to its benchmark the BofA Merrill Lynch US High Yield Master Blended II Index.

The third best performing US high yield bond fund in 2011 was the Allianz US High Yield fund, which returned 4.25% under the stewardship of Doug Forsyth.

Forsyth has managed the fund since its launch in August 2010. He invests primarily in securities with a B credit rating and runs an average duration of 3.72 years.

Who made money is US High Yield Bonds: The Top 10 in 2011