Polen Bank Loan Fund

Management & Investment Process

  • Management

  • The investment team leverages experience and knowledge within a disciplined investment process.

    • John Sherman

      Portfolio Manager

      • 18

      • Years Industry
    • Benjamin Santonelli

      Portfolio Manager

      • 19

      • Years Industry
  • Investment Process

  • The Polen Bank Loan Fund seeks to exploit inefficiencies in the under researched middle market and lower-tier (B/CC-rated) segments of the leveraged loan market. The Fund intends to invest its assets primarily in credit instruments that are rated below investment grade by some or all relevant independent rating agencies. Polen Capital aims to construct a high-conviction portfolio with a yield advantage relative to the S&P LSTA Leveraged Loan Index.

    • Bottom-Up Fundamental Research
      • Analyze entire company, not just an individual loan/bond tranche
      • 360-degree view of business – customers, suppliers, competitors
      • Identify sustainable competitive advantages
    • Cash Flow
      • Understand how a target company generates cash
      • Assess durability and sustainability of cash flows
    • Limit Credit Losses
      • Calculate and continuously monitor company’s total enterprise value
      • Focus on loan-to-value and cash flow
    • Legal Protections
      • Understand contractual protections in debt agreements
      • Assess "waterfall of value" and downside scenarios
    • Portfolio Construction
      • Construct concentrated portfolios – overweight high confidence positions
      • Target first lien banks loans
      • Opportunistic allocation to higher yielding second-lien secured loans, short-dated high yield bonds, and private credit
      • Generate yield through the coupon, not by seeking stressed or distressed credit
      • Security selection drives performance
      • No macro bets or themes
      • Minimize portfolio volatility
      • Long-term investment horizon
      • Monitor to provide for appropriate diversification and liquidity
  • Disclosures

  • Tranche: Tranches are pieces of a pooled collection of securities, usually debt instruments, that are split up by risk or other characteristics in order to be marketable to different investors. Each portion, or tranche, is one of several related securities offered at the same time but with varying risks, rewards and maturities to appeal to a diverse range of investors.

    Waterfall of Value: This term is used to describe, in the context of an issuer’s restructuring, the value that each class of debt must be repaid before any residual value is permitted to be distributed by the issuer to more junior classes of debt.

    The S&P/LSTA Leveraged Loan Index is a broad, unmanaged high yield index designed to track the market-weighted performance of leveraged institutional loans based on market weightings, spreads, and interest payments. From inception until October 1, 2016, the benchmark was the Bloomberg Barclays High Yield Loan Index (at which point, such index was discontinued); thereafter, the benchmark changed to the S&P/LSTA Leveraged Loan Index through the closing of the Bank Loan Composite on February 29, 2019. The benchmark changed to the S&P/LSTA Leveraged Loan Index with the reopening of the Composite on November 30, 2021. The index does not bear any fees or expenses and does not reflect the specific investment restrictions and guidelines of the portfolio. The volatility and other material characteristics of the indices referenced may be materially different from the performance achieved. In addition, the portfolio’s holdings may be materially different from those within the index. Indices are unmanaged.

    Risks: Mutual fund investing involves risk, including possible loss of principal. The Fund targets investments in high yield, or below investment grade, bank loans and bonds. Such investments are subject to several types of investment risk, including, without limitation, credit risk (i.e., the risk that the issuer may be unable to make timely interest payments as well as repay the principal upon maturity), interest rate risk (i.e., the risk that their value will be inversely affected by fluctuations in the prevailing interest rates), market risk (i.e., the risk that their value may decline, sometimes rapidly or unpredictably, due to general market conditions), call or income risk, (i.e., the risk that certain debt securities with high interest rates will be prepaid or “called” by the issuer before they mature), and event risk (i.e., the risk that certain debt securities may suffer a substantial decline in credit quality and market value if the issuer restructures). In particular, debt investments in high yield issuers, which are described as speculative by major credit rating agencies, are generally more susceptible to credit risk than other fixed income investments. In addition, the Fund’s high yield debt investments, including bank loans and Rule 144A securities, are subject to liquidity risk, as the Fund may not be able to sell investments at the best prices or at the value that the Fund places on them. The Fund may also hold positions in equity or other assets that the Fund receives as part of a reorganization process of a high yield issuer. Such investments, which are the most junior security in a company’s capital structure and typically subject to significant volatility in price, are subject to equity securities risk. An investor should be aware that the foregoing is not an exhaustive list of all of the risks associated with investing in the Fund.

    Investors should consider the investment objectives, risks, charges, and expenses of the Polen Bank Loan Fund carefully before investing. A prospectus with this and other information about the Fund may be obtained by calling 1-888-678-6024 or from the Fund Documents section of this webpage. It should be read carefully before investing.

    Polen Bank Loan Fund is distributed by Foreside Funds Distributors LLC., not affiliated with Polen Capital Management.