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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"PGIM High Yield Fund maintains a constructive but cautious stance as spreads compressed to 270 bps in Q2 2026. The manager favors high-quality, short-duration bonds and overweights homebuilders and telecom while underweighting media and restaurants."
PGIM High Yield Fund delivered 2.47% returns in Q2 2026 as U.S. high yield spreads compressed 47 bps to 270 bps, driven by strong earnings, softening Middle East tensions, and hawkish Fed outcomes. The fund outperformed its benchmark gross of fees through strong security selection in telecom, media and entertainment, and chemicals. With spreads at year-to-date tights, the manager believes risks are skewed to the downside but maintains a constructive view for 2026, expecting positive total returns driven by carry in an attractive rate environment. The portfolio is positioned with overweights to short-duration bonds and high-quality issues, favoring homebuilders, telecom, and finance companies while underweighting technology software, media and entertainment, and retailers and restaurants. In leveraged loans, the manager expects 5% returns in 2026 and favors public BB and high-B loans over lower-quality credits, viewing default avoidance as the primary driver of alpha over the next 12-24 months. The default rate ended June at 2.67%, up from 2.07% in March but well below long-term averages.
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