It’ll be a good holiday for John Arnhold and his team at First Eagle Investment Management. The fund family announced on Wednesday it will mark the five-year anniversary of its First Eagle High Yield Fund (FEHIX) with a corresponding five-star rating from Morningstar.
The fund has $668 million in assets (as of Nov. 30, 2012), and has returned an astounding 13% annually since it was launched in November 2007 at Dwight Asset Management. First Eagle Investment Management began advising the fund last year, and it has been managed by Edward Meigs and Sean Slein since inception.
“Edward and Sean have an investment philosophy steeped in attempting to preserve capital and maintain purchasing power,” Arnhold, First Eagle’s chairman and chief investment officer, told AdvisorOne. “They’re not pressing for yield, and can take a longer view. But we have a margin of safety built in to the price we’re willing to pay.”
Arnhold noted that as of Sept. 30, the fund had an average maturity of just over five and a half years and an average duration of just over three years, although adding in coupons brings the horizons down somewhat.
“We look at bottom-up security selection,” he added. “And we rotate risk depending on where we are in the market cycle. In a deteriorating environment, we go with higher quality issues with shorter maturities. Likewise, if we’re at the beginning of a recovery, we’ll move to lower quality issues with longer time horizons.”