Ticker: 
PSHNX
  |  CUSIP: 
707269882
AS OF 

Penn Capital Defensive Short Duration High Income Fund

Nav Daily $ Change Daily % Change Year To Date Inception Date Share Class
$9.87
^$0.01
^0.10%
1.95%
Institutional

Overview

The Defensive Short Duration High Income Fund seeks to combine the downside protection of investment grade bonds with the upside return potential of high yield bonds while minimizing interest rate risk.

Differentiated profile characteristics of the Defensive Short Duration High Income Fund:

  • Focus on Single-B and above credit quality rated bonds that are typically senior in a company’s capital structure
  • Fill void created by total-return strategies selling lowest yielding securities
  • Detailed covenant reviews that help identify bonds with higher probability of a successful refinance

Objective

The Penn Capital Defensive Short Duration High Income Fund seeks to provide a high level of current income.

Strategy

The Fund seeks to achieve its investment objective by investing, under normal circumstances, primarily in short-term fixed income securities and senior floating rate loans that are rated below investment grade.

Investment Type Examples

Fixed income securities in which the Fund may invest include debt securities such as bonds, notes and debentures.

Industry Examples

Aerospace & Defense, Consumer Products, Food & Drug Retail, Financials, Healthcare, Media/Broadcasting, Metals and Mining, Printing/Publishing, Telecommunications, and Utilities.

Performance

AS OF 09/30/2018
Ticker: PSHNX | CUSIP: 707269882
MTD QTD YTD 1 Year Since Inception 1 Year09/30/2017 to 09/30/2018 Inception
to 09/30/2018
Penn Capital Defensive Short Duration High Income Fund
0.42%
1.53%
2.22%
2.49%
2.13%
2.49%
2.13%
ICE BofAML 1-3 Yr. US High Yield BB-Rated Index
0.35%
1.55%
2.12%
2.15%
2.65%
2.15%
2.65%
ICE BofAML 1-3 Yr. US High Yield Cash Pay BB-B Rated Index
0.44%
1.79%
3.28%
3.51%
3.92%
3.51%
3.92%
ICE BofAML 1-3 Yr. US Corporate BBB-Rated Index
0.11%
0.80%
0.93%
0.97%
1.18%
0.97%
1.18%
AS OF 09/30/2018
Ticker: PSHNX | CUSIP: 707269882
Penn Capital Defensive Short Duration High Income Fund
MTD 0.42
QTD 1.53
YTD 2.22
1 Year
2.49
Since Inception 2.13
1 Year (09/30/2017 to 09/30/2018) 2.49
Inception(Inception Date to 09/30/2018) 2.13
ICE BofAML 1-3 Yr. US High Yield BB-Rated Index
MTD 0.35
QTD 1.55
YTD 2.12
1 Year
2.15
Since Inception 2.65
1 Year (09/30/2017 to 09/30/2018) 2.15
Inception(Inception Date to 09/30/2018) 2.65
ICE BofAML 1-3 Yr. US High Yield Cash Pay BB-B Rated Index
MTD 0.44
QTD 1.79
YTD 3.28
1 Year
3.51
Since Inception 3.92
1 Year (09/30/2017 to 09/30/2018) 3.51
Inception(Inception Date to 09/30/2018) 3.92
ICE BofAML 1-3 Yr. US Corporate BBB-Rated Index
MTD 0.11
QTD 0.80
YTD 0.93
1 Year
0.97
Since Inception 1.18
1 Year (09/30/2017 to 09/30/2018) 0.97
Inception(Inception Date to 09/30/2018) 1.18

Investment Process

Step 1
Economic Outlook

Penn Capital’s team determines industries with potential relative value: the economic cycle, business environment, industry/sector analysis, and interest rates.

Step 2
Quantitative Screening

Penn Capital’s analysts and portfolio managers screen industries for companies with higher spreads to treasury relative to: comparable companies, industry averages, and historical averages.

Step 3
Other Proprietary Sources

Penn Capital’s analysts and portfolio managers source ideas from leveraging our equity relationships: equity investment styles & conferences, IPO & competitive intelligence, management meetings and road shows, industry experts, ex-government officials.

Step 4
Improving Fundamentals

Penn Capital's analysts and portfolio managers further screen for companies with improving financial metrics such as Debt/EBITDA, EBITDA/interest expense, free cash flow/debt.

Step 5
Liquidity Outlook

Penn Capital's analysts and portfolio managers screen for liquidity issues and perform research such as covenant analysis, bank loan availability, and asset value analysis.

Step 6
Qualitative Research

Penn Capital's analysts and portfolio managers then perform qualitative research such as company management, strong fundamentals, positive catalysts, suppliers/customers /competitors, and industry experts.

Step 7
Penn Capital Risk Rating (PRR)

Primary and secondary analysts and portfolio managers assign the proprietary Penn Capital Risk Rating (PRR) which includes forward looking estimates of credit quality, quantitative/qualitative factors, and rating agencies.

Step 8
Team Review and Approval

The investment team consists of all portfolio managers and analysts; daily team meetings are primary forums for discussion and a consensus at team level is required prior to moving a recommendation on to High Yield Credit Committee.

Step 9
High Yield Credit Committee Approval*

Committee confirms PRR and relative value: review of ideas approved by investment team, considers impact of credit on portfolio construction.

*After Step 9, an idea is either approved for portfolio inclusion or dismissed to the company watch list with further due diligence required.

Fees & Expenses

Total Fund annual net operating expenses (after fee waiver/expense reimbursement) are: Institutional Class 0.54%.

Total Fund annual gross operating expenses (before fee waiver/expense reimbursement) are: Institutional Class 6.71%.

The Fund's advisor has contractually agreed to waive its fees and/or pay for operating expenses of the Fund to ensure that total annual fund operating expenses do not exceed 0.54% of the average daily net assets for Institutional Class shares of the Fund. This agreement is in effect until July 17, 2018. The Fund’s advisor is permitted to seek reimbursement from the Fund of fees waived for a period of three years from the date of the waiver or payment to the extent it does not exceed the expenses limits.

Portfolio Managers

Peter Duffy, CFA

Senior Portfolio Manager, Senior Partner

Mr. Duffy began his career with Penn Capital in 2006. Mr. Duffy serves as the portfolio manager for Penn Capital’s Defensive and Short Duration High Yield and Multi-Credit Spectrum strategies.  He also chairs the firm’s Credit Strategy Committee. Prior to joining Penn Capital, Mr. Duffy was a Director for Deutsche Asset Management’s top-decile $5 billion global high yield debt team, and his investment experience included both leveraged loans and emerging markets debt. Previously, he worked on mergers & acquisitions at GE Capital and as a management consultant at Arthur Andersen LLP. He received a BS in Finance, Summa Cum Laude, from Villanova University and an MBA from The Wharton School of the University of Pennsylvania.

Richard Hocker

Founder, Chief Investment Officer & Chief Executive Officer

Mr. Hocker founded Penn Capital in 1987 and serves as Chief Investment Officer & Chief Executive Officer, guiding overall portfolio strategy.  His investing and institutional non-investment grade corporate lending experience spans over forty years. While serving as a Partner for Delaware Investment Advisors (DIA) from 1977 to 1987, he was responsible for building the investment side of DIA’s fixed income operation.  During this period, Mr. Hocker developed and managed one of the nation’s first high yield mutual funds, the Delchester High Yield Bond Fund. He also served as the first high yield bond manager for several institutional clients including General Motors, State of Vermont Teachers Retirement Association, and Colorado Fire and Police.  Prior to DIA, Mr. Hocker trained as a corporate lender and supported key senior lenders at Provident National Bank, which is now PNC, a top 20 US Banking institution.  He later rose to serve as head of the investment division.  Mr. Hocker also founded and served as CEO of Covenant Bank, a NJ based regional bank which grew to 16 branches and $500mm in deposits before being acquired by Wachovia Corporation in 1997.

He and his wife, Marcia Hocker, are the founders of the Ethel Mae Hocker Foundation. The Ethel Mae Hocker Foundation provides educational opportunities to less fortunate, deserving Greater Philadelphia-area elementary and high school students. Mr. Hocker received both his BS in accounting and MBA in finance from the Kogod School of Business at American University.