| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 3.1% | 0.9% | 6.7% |
| 2025 |
|---|
| 6.7% |
The Brandes Core Plus Fixed Income Fund delivered a 0.92% return in Q4 2025 but underperformed its benchmark due to underweight positioning in agency mortgage-backed securities. The Fed cut rates by 1.75% since September, but the manager questions whether these cuts are economically justified given that inflation remains 25% higher since COVID and continues outpacing wage growth. Early warning signs of credit stress are emerging in private credit markets, with 15% of borrowers unable to cover interest costs, while public corporate bond spreads remain near historically tight levels. The fund maintains a defensive posture, favoring shorter-maturity corporate bonds with strong asset coverage and managing duration 10% shorter than benchmark. Security selection contributed positively, led by media and consumer holdings, while technology and banking detracted. The manager believes the market may be underestimating the neutral fed funds rate and expects inflation to trend higher rather than toward the Fed's 2% target, positioning for potential spread widening opportunities.
The Brandes Core Plus Fixed Income Fund maintains a defensive positioning in an environment where corporate bonds are priced to perfection, inflation remains sticky, and early credit stress signals emerge, while focusing on security selection and shorter-duration corporate bonds with strong asset coverage.
The manager remains optimistic about the prospects for the Brandes Core Plus Fixed Income Fund while maintaining a defensive posture. They focus on identifying value and understanding risk rather than forecasting economies, believing that security selection will be an important driver of returns going forward.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 23 2026 | 2025 Q4 | ADT, CNSL, COTY, F, GTN, KSS, OGN, SABR, SPR, USB, UVN | Corporate Bonds, credit, duration, Fed policy, fixed income, inflation, Treasuries, Yield Spreads | - | Consumer Price Index is approximately 25% higher since COVID pandemic, the highest rise in nearly forty years. Inflation has outpaced wage growth, creating affordability issues.… |
| Oct 21 2025 | 2025 Q3 | - | credit, duration, inflation, interest rates, Treasuries |
SABR SABR |
The fund underperformed its benchmark as the Fed cut rates despite sticky inflation and record federal debt. Management remains defensive, favoring short-maturity corporate bonds and… |
| Jul 22 2025 | 2025 Q2 | KSS | Bonds, credit spreads, diversification, duration, Yields | - | The commentary highlights opportunities in fixed income created by higher yields and credit dispersion. Management emphasizes active duration and credit selection to enhance risk-adjusted returns.… |
| Mar 31 2025 | 2025 Q1 | JPM, PBI | - | - | - |
| Dec 31 2024 | 2024 Q4 | - | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Credit StressThe fund is responding to historically low credit spreads by reducing exposure to high yield and other lower-rated debt. They believe current spreads offer insufficient compensation for credit risk and increase the risk of permanent impairment of capital. The managers are downside-focused and do not share the market's optimism needed to justify such low spreads. |
Credit spreads High yield Credit risk Permanent impairment Risk compensation |
InflationInflation has continued to be a persistent feature in Japan and has prompted changes in both corporate and consumer behavior. Importantly, inflation has fed through to corporate earnings and equity performance. Companies that have successfully passed on higher costs to consumers have benefited from improved operating margins. |
Inflation Corporate Earnings Operating Margins Consumer Behavior Cost Pass-through | |
RatesFederal Reserve resumed rate-cutting cycle with first cut since December 2024, signaling resumption of easing. Expected three cuts of 25bps between now and first quarter 2026 as Fed responds to signs of weakness in US labor market. |
Fed Monetary Policy Labor Market Easing Liquidity | |
| 2025 Q3 |
CreditFund focuses on elevated carry in high yield credit markets with spreads remaining range bound below 300 basis points. Manager believes high yield credit is fundamentally strong but valuations are tight, particularly in higher quality BBs. Strategy emphasizes sourcing positions with higher income levels given limited price appreciation opportunities. |
High Yield Credit Spreads Carry Investment Grade |
InflationInflation has continued to be a persistent feature in Japan and has prompted changes in both corporate and consumer behavior. Importantly, inflation has fed through to corporate earnings and equity performance. Companies that have successfully passed on higher costs to consumers have benefited from improved operating margins. |
Inflation Corporate Earnings Operating Margins Consumer Behavior Cost Pass-through | |
| 2025 Q2 |
FixedIncome |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 21, 2025 | Fund Letters | Timothy M. Doyle | SABR | Sabre Corp. | Information Technology | Travel Technology | Bull | NASDAQ | Bonds, Collateral, credit quality, deleveraging, Free Cash Flow, Software, Travel | Login |
| Oct 21, 2025 | Fund Letters | Timothy M. Doyle | SABR | Sabre Corp. | Information Technology | Travel Technology | Bull | NASDAQ | Bonds, Collateral, credit quality, deleveraging, Free Cash Flow, Software, Travel | Login |
| TICKER | COMMENTARY |
|---|---|
| ADT | The Fund experienced a call of positions in ADT |
| CNSL | The Fund experienced a call of positions in Consolidated Communications |
| COTY | The Fund experienced a call of positions in Coty |
| F | For insight into the real economy operating beneath this AI and data center boom, we must look elsewhere within the S&P 500, including bellwethers like Ford |
| GTN | Select holdings in corporate bonds provided a positive contribution to returns during the quarter, led by holdings in media (Univision & Gray Media). The Fund added to existing positions in a second lien security from Gray Media (9.625% coupon, maturing 7/15/32, rated B3/CCC). |
| KSS | Select holdings in corporate bonds provided a positive contribution to returns during the quarter, led by holdings in consumer cyclical (Kohl's Corp) |
| OGN | Select holdings in corporate bonds provided a positive contribution to returns during the quarter, led by holdings in pharmaceuticals (Organon) |
| SABR | Select holdings in technology (Sabre Global) detracted from returns. The Fund added to existing positions in a secured bond from Sabre Global (11.125% coupon, maturing 7/15/30, rated B3/B-) |
| SPR | The Fund experienced a call of positions in Spirit Aerosystems |
| USB | Select holdings in banking (US Bank) detracted from returns |
| UVN | Select holdings in corporate bonds provided a positive contribution to returns during the quarter, led by holdings in media (Univision & Gray Media) |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
