Investor Summary
Fund Strategy
FUND PERFORMANCE AS OF 31st December 2025
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Harris Oakmark's fixed income commentary emphasizes that current market calm can be misleading, with credit spreads near historically tight levels despite emerging risks. Investment-grade spreads at 80 basis points and high-yield at 290 basis points over Treasuries leave little room for disappointment while issuer leverage metrics have begun to soften. The manager highlights several concerns including escalating geopolitical tensions, early signs of consumer stress, and the growing influence of private credit markets that can delay price discovery. The firm maintains a conservative positioning approach, focusing on selectivity rather than broad deployment when valuations appear full. They are finding opportunities in non-agency securitization and evaluating corporate credit in pressured sectors like chemicals, technology, and healthcare where market overreaction may have created value. The strategy emphasizes patience and preparedness, maintaining flexibility to act when prices dislocate from fundamentals rather than forcing investments when compensation for risk appears inadequate.
Strong valuations do not mean low risk in fixed income markets, and the manager emphasizes disciplined selectivity over broad deployment when credit spreads are near historically tight levels.
The manager expects opportunity to be selective rather than widespread in current environment. With spreads this tight, forward returns are likely to come primarily from income if conditions remain constructive, not from repricing of risk. The approach emphasizes patience and preparedness for when conditions change, maintaining conservative positioning until prices dislocate from fundamentals.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 8 2026 | 2025 Q4 | - | credit, Discipline, fixed income, risk management, selectivity, Valuations | - | Credit spreads are near historically tight levels with investment-grade at 80 basis points and high-yield at 290 basis points over Treasuries. Compensation for corporate default… |
| Oct 7 2025 | 2025 Q3 | ARE, CNC, CVS | Bonds, Credit Risk, fixed income, healthcare, Simplicity |
ARE US CNC US CVS US |
The letter highlights disciplined fixed income investing focused on simple, durable credit theses rather than macro forecasting. Healthcare credits are emphasized as offering attractive spreads… |
| Jun 30 2025 | 2025 Q2 | - | credit, fixed income, Spreads, Yield | - | - |
| Mar 31 2025 | 2025 Q1 | PODD | - | - | - |
| Jan 8 2025 | 2024 Q4 | - | - | - | - |
| Oct 9 2024 | 2024 Q3 | - | - | - | - |
| Jun 30 2024 | 2024 Q2 | - | - | - | - |
| Apr 15 2024 | 2024 Q1 | - | - | - | - |
| Aug 1 2024 | 2023 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 |
Private CreditThe space has become very popular with lots of LP money chasing returns. Some sponsors have paid extremely high prices and lent on unfavorable terms. Many have also lent into the AI/data-center space to businesses with questionable futures. |
Credit Lending Risk | |
Risk AppetiteManager emphasizes disciplined risk management through cycle awareness rather than market timing. Fund maintains cash cushion during high-risk periods and deploys capital countercyclically. Approach focuses on behavioral edge by having cash available when fear creates best entry points and avoiding leverage that leads to forced selling. |
Leverage Cash Volatility Positioning Discipline | |
| 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 |
Discipline |
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HealthcareHealthcare was the strongest relative contributor in the quarter with holdings increasing nearly +16% compared to benchmark returns of roughly +12%. Exact Sciences was acquired for a significant premium by Abbott Laboratories resulting in an +86% return, while other strong performers included Tarsus Pharmaceuticals, Glaukos following approval of a new product, Penumbra, and Repligen driven by strong earnings results. |
M&A Product Approval Earnings Biotech | |
Simplicity |
||
| 2025 Q2 |
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 |
Fixed Income |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 7, 2025 | Fund Letters | Adam Abbas | ARE US | Alexandria Real Estate Equities Inc. | Real Estate | Office REIT | Bull | NYSE | balance sheet, Biotech, Credit, Life-science, Real Estate, REIT, valuation | Login |
| Oct 7, 2025 | Fund Letters | Adam Abbas | CNC US | Centene Corp. | Health Care | Managed Care | Bull | NYSE | healthcare, managed care, Margins, Medicaid, turnaround, valuation | Login |
| Oct 7, 2025 | Fund Letters | Adam Abbas | CVS US | CVS Health Corp. | Health Care | Health Care Services | Bull | NYSE | deleveraging, healthcare, Insurance, Margins, Pbm, Regulatory, valuation | Login |
| TICKER | COMMENTARY |
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