ALPS launches new DDJ Opportunistic High Yield Fund

By Toni Weeks

San Luis Obispo, Calif., July 16 – ALPS Series Trust has launched a new high-yield, fixed-income fund, the DDJ Opportunistic High Yield Fund, according to a press release from the fund’s investment adviser, DDJ Capital Management, LLC.

This is DDJ’s first mutual fund offering that pursues its opportunistic high-yield strategy, the release said. The new fund is a response to client demand for a fund with daily liquidity and lower investment minimums than the company had previously offered. The minimum investments are $5 million for institutional class shares (Symbol: DDJIX), $1 million for class I shares (Symbol: DDJCX) and $2,500 for class II shares (Symbol: DDJRX).

“Faced with a persistent low-yield environment, investors continue to seek solutions that may provide higher current income and long-term capital appreciation,” Jack O’Connor, DDJ senior vice president and head of business development and client service, said in the release. “We’re pleased to offer this new fund in respond to demand for DDJ’s opportunistic high-yield strategy at a lower investment minimum and with daily valuation.”

According to an N-1A filing with the Securities and Exchange Commission on Wednesday, the fund will seek overall total return consisting of a high level of current income together with long-term capital appreciation and to outperform the broader high-yield market over a complete credit cycle. The fund seeks to achieve its objective mainly by investing in high-yield, fixed-income securities with a focus on middle-market issuers in the United States and, to a lesser extent, Canada.

Under normal circumstances, the fund will invest at least 80% of the value of its assets in high-yield, fixed-income securities. The adviser intends to manage a relative concentrated portfolio typically comprising between 60 to 80 issuers and 80 to 100 issues.

According to the press release, DDJ believes that the fund’s flexibility to invest, sell and reinvest throughout the capital structure of an issuer – and in particular, in both more senior bank loans and more junior high-yield bonds – will enable the firm to tailor its investment approach to the specific credit-related circumstances of that issuer and thereby select the most attractive opportunities for the fund.

Anthony Ranaldi is the lead portfolio manager, with Joseph Lind also serving as a portfolio manager.

“We expect continued volatility in the markets, which can create opportunity,” Ranaldi said. “One of the key potential advantages of DDJ’s flexible mandate is our ability to position the fund appropriately between opportunistic and more conservative investments based on our view of the overall market environment.”

The no-load fund has a redemption fee of 1% on any amounts redeemed within 60 days of purchase. Including management fees of 0.7%, and taking into account a fee waiver and expenses reimbursement agreement with the investment adviser, total annual fund operating expenses are expected to be 0.89% for class I, 1.14% for class II and 0.79% for institutional class shares.

DDJ Capital Management is based in Waltham, Mass.

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