Investment Objective

The Fund seeks low volatility and absolute returns consisting of income and moderate capital appreciation.

Investment Strategy

The Osterweis Short Duration Credit Fund invests in selective short duration, high yield corporate credits that are defensive, prioritize sustainable business practices, and are often misunderstood or undervalued. Bottom-up security selection and short durations seek to lessen interest rate risk and help investors earn stable income. By integrating sustainability into fundamental security selection, the Fund aims to further mitigate risk for a more resilient portfolio.

Highlights

  • Bottom-up security selection based on rigorous fundamental credit analysis
  • Integrates environmental, social, and governance (ESG) factors into security selection
  • Risk-focused approach to minimize surprises
  • Duration generally less than 2
  • Experienced investment team
  • Adviser is majority-owned by its employees

Minimum Investments

  • $5,000 initial investment for regular accounts
  • $1,500 initial investment for IRA or other tax-deferred accounts
  • $100 for subsequent investments

NAV as of 12/7/22

Price $8.39 Change $-0.01

Fund Facts

Ticker ZEOIX
CUSIP 74316P694
Inception Date 5/31/2011
Load None
12b-1 Fees None
Redemption Fee None
Net Assets
(as of 11/30/22)
$184 million
Fiscal Year Turnover
(as of 4/30/22)
131
Gross Expense Ratio
(as of 10/10/22)
0.85%

Philosophy

We believe in taking a carefully selected and duration-managed approach to high yield corporate debt. We build a portfolio of companies deliberately chosen for their fundamental strength and ability to repay debt. Our strict credit standards mean few bonds make it into our portfolio.

We aim to be risk managers first and foremost. In doing so, we evaluate each issuer with respect to many areas of risk including business risk, financial risk, and sustainability risk. We target strong businesses and work to understand a company’s defensive characteristics; its capital structure; environmental, social, and governance (ESG) practices; and its ability/incentives to repay debt in the case of difficult economic turbulence. By placing an emphasis on a comprehensive assessment of credit quality within the high yield debt universe, we focus on identifying and taking advantage of mispricings in the short duration high yield space that are often overlooked, misunderstood, or mis-rated.

We view sustainability factors as credit factors that contribute to an issuer’s creditworthiness, competitive advantage, and staying power. We believe integrating ESG factors into our credit research further mitigates credit risk, resulting in a profile focused on capital preservation and delivering attractive risk-adjusted total returns over time. In doing so, we provide a short-duration portfolio that can serve both traditional and sustainable mandates without requiring investors to choose between performance or progress.

Investment Team

Venk Reddy

Chief Investment Officer – Sustainable Credit & Portfolio Manager

Venk Reddy

Chief Investment Officer – Sustainable Credit & Portfolio Manager

Venk Reddy joined Osterweis Capital Management in 2022 as part of the Zeo Capital Advisors team transition. Prior to founding Zeo Capital in 2009, Mr. Reddy was a co-founder of Laurel Ridge Asset Management, a multi-strategy hedge fund, where he managed the credit, distressed, and event-driven portfolios. Previously, Mr. Reddy structured derivative products and was head of delta-one trading as a portfolio manager within Bank of America’s Equity Financial Products group (EFP). Mr. Reddy also managed investments in event-driven situations, convertible instruments, and options at Pine River Capital Management and HBK Investments, where he started his career.

Mr. Reddy is a principal of the firm and a Portfolio Manager for the sustainable credit strategies. He is also a portfolio manager for the growth & income and flexible balanced strategies.

Mr. Reddy graduated from Harvard University (B.A. in Computer Science with Honors).

Marcus Moore

Assistant Portfolio Manager

Marcus Moore

Assistant Portfolio Manager

Marcus Moore joined Osterweis Capital Management in 2022 as part of the Zeo Capital Advisors team transition, where he was an Assistant Portfolio Manager focused on credit research, including sustainability analysis. Before joining Zeo in 2019, Mr. Moore worked at Wells Fargo Bank for 14 years as an Analyst within Principal Investing, responsible for the retail, consumer, and gaming sectors across various asset classes including high yield bonds, leveraged loans, and structured products. Prior to working at Wells Fargo, Mr. Moore worked at Edison Mission Energy as an analyst and at Hamilton Resources, Procter & Gamble, and Goldman Sachs.

Mr. Moore is an Assistant Portfolio Manager for the sustainable credit strategies.

Mr. Moore graduated from Morgan State University in Baltimore, MD (B.S. in Accounting) and from the University of California, Los Angeles Anderson School with an M.B.A. He also holds the CPA designation.

The Osterweis Funds are available by prospectus only. The Funds’ investment objectives, risks, charges and expenses must be considered carefully before investing. The summary and statutory prospectuses contain this and other important information about the Funds. You may obtain a summary or statutory prospectus by calling toll free at (866) 236-0050, or by visiting the literature page. Please read the prospectus carefully before investing to ensure the Fund is appropriate for your goals and risk tolerance.

Mutual fund investing involves risk. Principal loss is possible.

The Osterweis Short Duration Credit Fund may invest in debt securities that are un-rated or rated below investment grade. Lower-rated securities may present an increased possibility of default, price volatility, or illiquidity compared to higher-rated securities. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. The Fund may invest more than 5% of its total assets in the securities of one or more issuers. Fundamental investing that integrates sustainability factors will entail deviations from the benchmark, potentially without resulting in favorable Environmental, Social, or Governance (ESG) outcomes.

While the fund is no-load, management fees and other expenses still apply. Please refer to the prospectus for more information.

Osterweis Capital Management is the adviser to the Osterweis Funds, which are distributed by Quasar Distributors, LLC.