A Seeking Alpha Contribution
- TFCVX targets stressed and distressed securities, with more than half of the portfolio classified as “special situation”.
- Active management is a must in this area.
- The fund currently yields more than 10%.
Third Avenue Focused Credit (MUTF:TFCVX) is an aggressive high-yield bond fund with a focus on stressed and distressed securities. The fund seeks to deliver total return, not current yield.
TFCVX’s strategy rests on what the firm calls the “Fulcrum Security…the most senior security that will likely convert into equity ownership in a restructuring.” Managers look for discounted debt securities that stand a good chance of being paid at par value in cases where the firm’s fortunes turn around, or stand a good chance of being converted to equity in a restructuring. They shy away from holding the highest-yielding debt in a company, since that debt could expire worthless, but they will also shy away from the lowest-yielding senior debt, since it doesn’t offer as attractive a yield. The fund’s sweet spot are the securities that turn into equity in a restructuring… To Continue Reading Please, Click Here.
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