The Muzinich Low Duration Fund (the “Fund”) typically invests at least 80% of the Fund’s net assets in a well-diversified portfolio of corporate bonds and senior loans, including floating rate loans. Like bonds, senior loans represent amounts borrowed by companies or other entities. Investments are primarily made in securities domiciled in or with principal business in developed markets, both outside the US and within the US. The Fund may have a majority of its assets in foreign securities, with permitted-currency emerging market exposure not to exceed 20% of the Fund’s assets. The permitted currencies of the Fund’s securities are USD, EUR, CHF, and GBP.
No more than 40% of the Fund’s net assets may be rated below investment grade. The Fund may invest in mutual funds or exchange-traded funds which invest principally in any of the previously mentioned types of fixed income securities and such investments will be included in the Fund’s 80% test.
The Advisor seeks to reduce the risk to the Fund from rising interest rates, which will typically result in falling bond prices, by investing principally in securities with shorter durations. The Low Duration Fund average duration is typically no more than two years, with a maximum of 2.5 years, where duration is a measure of a portfolio’s sensitivity to interest rate changes. Due to market fluctuations, the average “duration” profile of the portfolio may vary from time to time. The Advisor believes that this short duration approach reduces the risk to the portfolio from rising interest rates.
The portfolio is actively managed and the Fund may sell a holding when it meets the portfolio manager’s expectations, no longer offers compelling relative value, shows deteriorating fundamentals, or if it falls short of the portfolio manager’s expectations, among other reasons. In the rare instance of a default within the portfolio, the portfolio manager may decide to continue to hold a bond or loan (or related securities).