PGIM High Yield Fund

Investor Summary

PGIM Fixed Income manages the fund with a team of experienced portfolio managers led by Robert Cignarella, who serves as Managing Director and Head of U.S. High Yield. Cignarella brings over 20 years of leveraged finance experience, including previous leadership roles at Goldman Sachs Asset Management, and holds an MBA from University of Chicago and CFA designation. The management team demonstrates significant tenure, with Robert Spano managing portfolios since 2007 and Ryan Kelly since 2012. PGIM Fixed Income operates as a division of PGIM Inc., managing approximately $881-906 billion in assets globally with over 350 investment professionals.

Fund Strategy

The fund seeks to maximize current income by investing primarily in high-yield bonds rated Ba or lower by Moody's or BB or lower by Standard & Poor's, with capital growth as a secondary goal. PGIM Fixed Income employs a research-driven investment philosophy that emphasizes fundamental bottom-up security selection through a relative value framework, with particular attention to risk management and risk budgeting. The high-yield strategy specifically focuses on the 'higher quality' segment of the high yield market, emphasizing BB and B rated corporate bonds with heavy emphasis on default avoidance. The approach seeks to generate approximately two-thirds of excess returns from individual security selection and one-third from industry allocation decisions.

ANNUALIZED SINCE INCEPTION	QUARTERLY	YTD
6.2%	-	-

Executive Summary

PGIM High Yield Fund navigated a challenging Q1 2026 as high yield spreads widened to 11-month highs amid escalating Middle East conflicts, AI disruption fears, and significant retail outflows of $7.6 billion. The fund outperformed its benchmark gross of fees through superior security selection, particularly in cable & satellite, telecom, and electric & water sectors. Despite headwinds, the manager maintains a constructive outlook supported by muted new issuance and robust credit fundamentals. The default rate remains well below long-term averages at 2.07%. Portfolio positioning emphasizes short-duration bonds while reducing underweight to high-quality issues. Sector overweights include building materials & home construction, telecom, and finance companies, while maintaining underweights in technology, media & entertainment, and retailers & restaurants. The manager expects spreads to remain range-bound at elevated levels in Q2 but believes high yield bonds should generate positive total returns through 2026, driven by solid technicals and credit quality despite macro uncertainties.

Core Thesis

Despite elevated short-term risks from geopolitical tensions and AI disruption fears, the fund maintains a constructive outlook on high yield bonds based on solid market technicals, robust credit fundamentals, and attractive relative value opportunities emerging from market dislocations.

Forward Outlook

The manager expects U.S. high yield bond spreads to remain range-bound at elevated levels in Q2, with solid technicals and robust credit fundamentals mitigating prominent concerns. They believe high yield bonds should continue generating positive total returns in the coming quarters, maintaining an overall constructive view for 2026.

Date	Letter	Tickers	Keywords	Pitches	Quick Takes
May 4 2026	2026 Q1	-	credit, energy, financials, high yield, Spreads, technology	-	PGIM High Yield outperformed during Q1 spread widening despite geopolitical tensions and AI disruption fears. Fund maintains constructive 2026 outlook based on solid credit fundamentals and muted issuance. Positioned defensively with short-duration overweight and quality bias while targeting relative value opportunities from market dislocations.
Jan 30 2026	2025 Q4	-	AI, credit, high yield, Refinancing, Spreads, Technicals, Telecom	-	PGIM High Yield Fund expects spreads to remain near historic tights through 2026 in a late-cycle environment of low volatility. Strong technicals from healthy refinancing and modest inflows support the outlook, while increased M&A and AI capex may limit further tightening. The fund maintains short-duration overweight and selective sector positioning.
Nov 5 2025	2025 Q3	-	bank loans, credit, duration, high yield, Spreads, Technicals	-	PGIM delivered 2.5% in Q3 as high yield spreads hit near-historic tights. The fund maintains defensive positioning with short-duration overweight and quality bias despite supportive technicals. Manager expects range-bound spreads given macro risks while favoring higher-quality credits over CCCs as default avoidance becomes key alpha driver.
Jul 22 2025	2025 Q2	-	bank loans, credit, duration, high yield, Spreads, Technicals	-	PGIM High Yield Fund capitalized on spread tightening in Q2 2025 through superior security selection and tactical positioning. Despite compressed spreads at historic tights, solid technicals from light issuance and strong inflows support continued performance. The fund maintains overweight short-duration exposure while reducing underweight to high-quality credits, positioning defensively amid policy and geopolitical uncertainties.
Mar 31 2025	2025 Q1	-	Construction, credit, high yield, Spreads, technology, Telecom, Trade Policy, Utilities	-	PGIM High Yield Fund takes a defensive approach amid trade policy uncertainty, overweighting high-quality short-duration bonds, home construction, utilities, and telecom while avoiding cyclicals and European tariff-exposed names. Strong credit fundamentals with 1.2% defaults and supportive technicals provide foundation for selective risk-taking as economic concerns get reflected in spreads.
Sep 30 2024	2024 Q3	-	Banking, credit, Default Rates, Fed Cuts, high yield, Spreads, Utilities	-	PGIM High Yield Fund capitalizes on attractive current yields and declining default rates while maintaining cautious positioning. Strong corporate balance sheets support the asset class despite refinancing headwinds. The manager focuses on selective credit analysis and opportunistic risk-taking, overweighting building materials and utilities while avoiding technology and consumer discretionary sectors.
Jul 31 2024	2024 Q2	-	Construction, credit, high yield, Spreads, technology, Utilities	-	PGIM High Yield Fund maintains cautious optimism on high yield bonds, positioned to add risk opportunistically during pullbacks. Overweight home construction and utilities while underweight technology and consumer sectors. Expects flat to declining default rates due to strong balance sheets, but remains cautious on geopolitical risks and election uncertainty.

Date

Letter

Tickers

Keywords

Pitches

Quick Takes

May 4 2026

2026 Q1

credit, energy, financials, high yield, Spreads, technology

PGIM High Yield outperformed during Q1 spread widening despite geopolitical tensions and AI disruption fears. Fund maintains constructive 2026 outlook based on solid credit fundamentals and muted issuance. Positioned defensively with short-duration overweight and quality bias while targeting relative value opportunities from market dislocations.

Jan 30 2026

2025 Q4

AI, credit, high yield, Refinancing, Spreads, Technicals, Telecom

PGIM High Yield Fund expects spreads to remain near historic tights through 2026 in a late-cycle environment of low volatility. Strong technicals from healthy refinancing and modest inflows support the outlook, while increased M&A and AI capex may limit further tightening. The fund maintains short-duration overweight and selective sector positioning.

Nov 5 2025

2025 Q3

bank loans, credit, duration, high yield, Spreads, Technicals

PGIM delivered 2.5% in Q3 as high yield spreads hit near-historic tights. The fund maintains defensive positioning with short-duration overweight and quality bias despite supportive technicals. Manager expects range-bound spreads given macro risks while favoring higher-quality credits over CCCs as default avoidance becomes key alpha driver.

Jul 22 2025

2025 Q2

bank loans, credit, duration, high yield, Spreads, Technicals

PGIM High Yield Fund capitalized on spread tightening in Q2 2025 through superior security selection and tactical positioning. Despite compressed spreads at historic tights, solid technicals from light issuance and strong inflows support continued performance. The fund maintains overweight short-duration exposure while reducing underweight to high-quality credits, positioning defensively amid policy and geopolitical uncertainties.

Mar 31 2025

2025 Q1

Construction, credit, high yield, Spreads, technology, Telecom, Trade Policy, Utilities

PGIM High Yield Fund takes a defensive approach amid trade policy uncertainty, overweighting high-quality short-duration bonds, home construction, utilities, and telecom while avoiding cyclicals and European tariff-exposed names. Strong credit fundamentals with 1.2% defaults and supportive technicals provide foundation for selective risk-taking as economic concerns get reflected in spreads.

Sep 30 2024

2024 Q3

Banking, credit, Default Rates, Fed Cuts, high yield, Spreads, Utilities

PGIM High Yield Fund capitalizes on attractive current yields and declining default rates while maintaining cautious positioning. Strong corporate balance sheets support the asset class despite refinancing headwinds. The manager focuses on selective credit analysis and opportunistic risk-taking, overweighting building materials and utilities while avoiding technology and consumer discretionary sectors.

Jul 31 2024

2024 Q2

Construction, credit, high yield, Spreads, technology, Utilities

PGIM High Yield Fund maintains cautious optimism on high yield bonds, positioned to add risk opportunistically during pullbacks. Overweight home construction and utilities while underweight technology and consumer sectors. Expects flat to declining default rates due to strong balance sheets, but remains cautious on geopolitical risks and election uncertainty.

QUARTER	THEMES	TAGS
2026 Q1	Credit Stress High yield bond spreads widened to their highest level in 11 months, with the par-weighted U.S. high yield default rate rising to 2.07% from 1.88% at year-end 2025. Lower-quality CCC credits underperformed significantly with negative 1.3% returns.	Default Rate Spreads Credit Quality
	AI Growing artificial-intelligence disruption fears weighed on the high yield asset class during Q1 2026, contributing to spread widening and negative returns.	Disruption Technology
2025 Q4	Dividends The Fund focuses on equity securities where many stocks are expected to pay dividends as part of its income-seeking strategy. The equity allocation emphasizes companies with shareholder-oriented management and dividend-paying characteristics.	Income Yield Distributions
	Financials The Fund is currently substantially invested in the Financials sector, with performance closely tied to developments in this industry. The concentration creates exposure to regulatory changes and interest rate movements affecting financial companies.	Banks Insurance Interest Rates
2025 Q3	Credit Stress The fund discusses the low default rate environment with the par-weighted U.S. high yield default rate at 1.39% in September, down from 1.41% in June. However, they note increasing volume of distressed exchanges due to ongoing loosening of documentation standards in the market. The manager expects avoidance of defaults to be the biggest driver of alpha over the next 12-24 months.	Defaults Distressed Credit Quality Documentation Alpha
	Risk Appetite The fund maintains a defensive posture with overweight to short-duration bonds and reducing underweight to high-quality issues. They favor public BB and high B loans over sponsor-owned, low B and CCC loans, expecting lower-quality facilities to be challenged. The manager notes having less risk in the Fund relative to the Index detracted from performance.	Duration Quality Defensive Risk Management Positioning
2025 Q2	Credit Stress High yield default rate ended June at 1.41%, higher from 1.2% at end of March but below 1.47% at end of 2024. The fund continues to favor public BB and high B loans over sponsor-owned, low B and CCC loans as lower-quality facilities will be challenged by the fundamental backdrop. Avoidance of defaults will likely be the biggest driver of alpha over the next 12-24 months.	Default Rate Credit Quality BB Loans CCC Loans Alpha
	Data Centers U.S. utilities have weathered inflation well and underlying power demand remains solid, driven largely by the electricity needs of data centers. Artificial intelligence demand for fiber is driving positive near-term cash flow dynamics and security valuations. Issuance in the utility industry will likely remain robust as capex requirements to support load growth and grid modernization accelerate.	Power Demand Electricity AI Demand Fiber Grid Modernization
	Homebuilders Although mortgage rates remain elevated, tight supply particularly due to low availability in the existing home market and buyer adjustments to elevated rates has driven demand. Homebuilder balance sheets while slightly deteriorated remain strong as free cash flow has been used to pay down debt. The fund maintains an overweight position in home construction with 6.7% industry weight and +3.0% active allocation.	Mortgage Rates Housing Supply Balance Sheets Free Cash Flow Home Construction
	Telecom Infrastructure Elevated capital intensity yet to drive inflection to top-line/EBITDA growth for most issuers. In Europe, increasing fiber build and 5G deployment is being funded with third-party infrastructure partners. Ongoing in-market consolidation will improve economics of network buildouts. The fund maintains a 7.1% industry weight with +2.2% active allocation in telecom.	Capital Intensity Fiber Build 5G Deployment Consolidation Network Buildouts
2025 Q1	Trade Policy The fund is wary of near-term effects from the Trump administration's trade agenda, maintaining defensive positioning with underweights to cyclicals and potential tariff-impacted names in Europe. Trade conflicts create volatility and uncertainty around economic growth path.	Tariffs Trade Cyclicals Europe Uncertainty
	Credit Stress High yield spreads widened to six-month highs amid trade uncertainty and economic slowdown concerns. However, credit fundamentals remain solid with low defaults at 1.2%, strong corporate balance sheets, and historically strong credit quality supporting the market.	Spreads Defaults Credit Fundamentals Quality
	Homebuilders Despite elevated mortgage rates, tight supply and buyer adjustments to higher rates have driven demand. Homebuilder balance sheets are strong as free cash flow has been used to pay down debt, making this an overweight position.	Construction Mortgage Supply Balance Overweight
	Data Centers U.S. utilities have weathered inflation challenges well with underlying power demand remaining solid, driven largely by electricity needs of data centers. This supports the fund's overweight to electric utilities.	Power Electricity Utilities Demand Infrastructure
2024 Q3	Credit Stress Default rates declined to 1.79% from 2.84% at end of 2023, with corporate balance sheets in good shape overall. However, increased frequency of aggressive liability management exercises and distressed exchanges accounts for approximately half of all defaulted issuers year-to-date. Refinancing at higher interest rates eventually increases interest expenses and credit risk.	Default Rates Distressed Exchanges Credit Quality Liability Management Refinancing
	Rates Fed delivered 50 basis point rate cut in September with expectations for continued cuts. Yield curve continuing to steepen with spread tightening on longer duration high yield leading to better relative value in the frontend. Higher interest rates making it more difficult for highly levered credits to grow into their capital structures.	Fed Cuts Yield Curve Interest Rates Duration Spreads
2024 Q2	Credit Stress The fund expects default rates to remain flat or decline over the next 12 months due to strong balance sheets and manageable maturities. However, increased frequency of aggressive liability management exercises and distressed exchanges from sponsored issuers bears watching.	Default Rates Credit Selection Distressed Balance Sheets Maturities
	Energy Transition The fund maintains overweights to electric and independent energy sector names while being positioned for the ongoing transition in the energy sector.	Electric Utilities Independent Power Energy Infrastructure Power Generation Utilities

QUARTER

THEMES

Credit Stress

High yield bond spreads widened to their highest level in 11 months, with the par-weighted U.S. high yield default rate rising to 2.07% from 1.88% at year-end 2025. Lower-quality CCC credits underperformed significantly with negative 1.3% returns.

Default Rate Spreads Credit Quality

AI

Growing artificial-intelligence disruption fears weighed on the high yield asset class during Q1 2026, contributing to spread widening and negative returns.

Disruption Technology

2025 Q4

Dividends

The Fund focuses on equity securities where many stocks are expected to pay dividends as part of its income-seeking strategy. The equity allocation emphasizes companies with shareholder-oriented management and dividend-paying characteristics.

Income Yield Distributions

Financials

The Fund is currently substantially invested in the Financials sector, with performance closely tied to developments in this industry. The concentration creates exposure to regulatory changes and interest rate movements affecting financial companies.

Banks Insurance Interest Rates

2025 Q3

Credit Stress

The fund discusses the low default rate environment with the par-weighted U.S. high yield default rate at 1.39% in September, down from 1.41% in June. However, they note increasing volume of distressed exchanges due to ongoing loosening of documentation standards in the market. The manager expects avoidance of defaults to be the biggest driver of alpha over the next 12-24 months.

Defaults Distressed Credit Quality Documentation Alpha

Risk Appetite

The fund maintains a defensive posture with overweight to short-duration bonds and reducing underweight to high-quality issues. They favor public BB and high B loans over sponsor-owned, low B and CCC loans, expecting lower-quality facilities to be challenged. The manager notes having less risk in the Fund relative to the Index detracted from performance.

Duration Quality Defensive Risk Management Positioning

2025 Q2

Credit Stress

High yield default rate ended June at 1.41%, higher from 1.2% at end of March but below 1.47% at end of 2024. The fund continues to favor public BB and high B loans over sponsor-owned, low B and CCC loans as lower-quality facilities will be challenged by the fundamental backdrop. Avoidance of defaults will likely be the biggest driver of alpha over the next 12-24 months.

Default Rate Credit Quality BB Loans CCC Loans Alpha

Data Centers

U.S. utilities have weathered inflation well and underlying power demand remains solid, driven largely by the electricity needs of data centers. Artificial intelligence demand for fiber is driving positive near-term cash flow dynamics and security valuations. Issuance in the utility industry will likely remain robust as capex requirements to support load growth and grid modernization accelerate.

Power Demand Electricity AI Demand Fiber Grid Modernization

Homebuilders

Although mortgage rates remain elevated, tight supply particularly due to low availability in the existing home market and buyer adjustments to elevated rates has driven demand. Homebuilder balance sheets while slightly deteriorated remain strong as free cash flow has been used to pay down debt. The fund maintains an overweight position in home construction with 6.7% industry weight and +3.0% active allocation.

Mortgage Rates Housing Supply Balance Sheets Free Cash Flow Home Construction

Telecom Infrastructure

Elevated capital intensity yet to drive inflection to top-line/EBITDA growth for most issuers. In Europe, increasing fiber build and 5G deployment is being funded with third-party infrastructure partners. Ongoing in-market consolidation will improve economics of network buildouts. The fund maintains a 7.1% industry weight with +2.2% active allocation in telecom.

Capital Intensity Fiber Build 5G Deployment Consolidation Network Buildouts

2025 Q1

Trade Policy

The fund is wary of near-term effects from the Trump administration's trade agenda, maintaining defensive positioning with underweights to cyclicals and potential tariff-impacted names in Europe. Trade conflicts create volatility and uncertainty around economic growth path.

Tariffs Trade Cyclicals Europe Uncertainty

Credit Stress

High yield spreads widened to six-month highs amid trade uncertainty and economic slowdown concerns. However, credit fundamentals remain solid with low defaults at 1.2%, strong corporate balance sheets, and historically strong credit quality supporting the market.

Spreads Defaults Credit Fundamentals Quality

Homebuilders

Despite elevated mortgage rates, tight supply and buyer adjustments to higher rates have driven demand. Homebuilder balance sheets are strong as free cash flow has been used to pay down debt, making this an overweight position.

Construction Mortgage Supply Balance Overweight

Data Centers

U.S. utilities have weathered inflation challenges well with underlying power demand remaining solid, driven largely by electricity needs of data centers. This supports the fund's overweight to electric utilities.

Power Electricity Utilities Demand Infrastructure

2024 Q3

Credit Stress

Default rates declined to 1.79% from 2.84% at end of 2023, with corporate balance sheets in good shape overall. However, increased frequency of aggressive liability management exercises and distressed exchanges accounts for approximately half of all defaulted issuers year-to-date. Refinancing at higher interest rates eventually increases interest expenses and credit risk.

Default Rates Distressed Exchanges Credit Quality Liability Management Refinancing

Rates

Fed delivered 50 basis point rate cut in September with expectations for continued cuts. Yield curve continuing to steepen with spread tightening on longer duration high yield leading to better relative value in the frontend. Higher interest rates making it more difficult for highly levered credits to grow into their capital structures.

Fed Cuts Yield Curve Interest Rates Duration Spreads

2024 Q2

Credit Stress

The fund expects default rates to remain flat or decline over the next 12 months due to strong balance sheets and manageable maturities. However, increased frequency of aggressive liability management exercises and distressed exchanges from sponsored issuers bears watching.

Default Rates Credit Selection Distressed Balance Sheets Maturities

Energy Transition

The fund maintains overweights to electric and independent energy sector names while being positioned for the ongoing transition in the energy sector.

Electric Utilities Independent Power Energy Infrastructure Power Generation Utilities

Date	Pitch Type	Author	Ticker	Company	Industry	Sub Industry	Bull / Bear	Exchange	Keywords	Action
No Elevator Pitches found

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Author

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Sub Industry

Bull / Bear

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Keywords

Action

No Elevator Pitches found

TICKER	COMMENTARY
No ticker commentary found.

TICKER

COMMENTARY

No ticker commentary found.

Ticker	Put/Call	Amount Bought	Shares Bought	% Change	Weight %
No Recent Buys Data

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No Recent Buys Data

Ticker	Put/Call	Amount Sold	Shares Sold	% Change	Weight %	Status
No Recent Sells Data

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No Recent Sells Data

Industry	Prev Quarter %	Current Quarter %	Change
No industry data available

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No industry data available

Investment Summary

Investor Summary

Fund Strategy

FUND PERFORMANCE AS OF 31st March 2026

Investor Letters

Latest Executive Summary:

Executive Summary

Core Thesis

Forward Outlook

Investment Themes

Credit Stress

AI

Dividends

Financials

Credit Stress

Risk Appetite

Credit Stress

Data Centers

Homebuilders

Telecom Infrastructure

Trade Policy

Credit Stress

Homebuilders

Data Centers

Credit Stress

Rates

Credit Stress

Energy Transition

Investor Pitches

Current Portfolio as of ( 31st March 2026 )

Key Risks identified by Manager:

Key catalysts include:

Portfolio Implications

Ticker Commentary

Robert Cignarella Top Holdings

Recent Buys (13F)

Recent Sells (13F)

13F Sector Summary

Portfolio Distribution

Latest 13D & 13G Filings

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PGIM High Yield Fund