Peter Schwab, CFA, Senior Portfolio Manager for Impax Asset Management, oversees the firm’s diversified US high yield strategy, Impax High Yield Bond Fund. The fund seeks high current income and capital appreciation by investing in a diversified portfolio of predominantly high yield securities. It also mitigates sustainability risks by incorporating sustainability analysis into credit research and selection. Launched in 1999, the fund has over $500 million in assets under management across 234 holdings.
According to Impax Asset Management’s Citywire RIA article, “Three reasons to (still) be optimistic about high yield bonds – an update” written by Schwab and Roberto Bosch, CFA and the Impax High Yield Bond Fund Quarterly Commentary uncertainty continues to weigh on the broader credit market. However, the firm believes active high yield remains a compelling opportunity for investors. The firm points to wider spreads, corporate fundamentals, and growing dispersion as supportive factors for the asset class.
As US high yield navigates geopolitical conflict, elevated inflation, and shifting Fed rate expectations in the second half of the year, Impax finds that investors are exhibiting caution. All-in yields for the broad market rose from about 6.5% at the start of the year to around 7.4% by the end of the first quarter– still roughly 100 basis points below Liberation Day levels – though yields and spreads have since retreated somewhat from those wides. While investors are wondering whether the recent moves reflect a meaningful deterioration in the outlook, Impax believes it represents a repricing rather than a dislocation.
Even after this partial retracement, the repricing from earlier in the year has left a more constructive entry point for patient investors than was available in January. At the same time, the high yield and new-issue markets remain open and well subscribed. J.P. Morgan forecasts that healthy refinancing will occur over the next two years with roughly $225 billion of high yield refinancing and $375 billion of total gross issuance in 2026.1 While Impax expects refinancing risk to remain a concern for lower-rated companies and sectors in a secular decline, they deem it a question of pricing, not access.
Entering the second quarter, corporate fundamentals were in a position of relative strength with leverage and coverage ratios at or near longer-term medians. They remain resilient, although cushions are thinner than in 2022 as higher energy prices, elevated borrowing costs, and other input cost pressures cloud the outlook. The firm labels the environment as a bifurcated landscape where issuers with pricing power will navigate this period very differently from those leveraged to discretionary spending.
Impax notes that dispersion is widening across the ratings spectrum and increasingly favoring active high yield over leveraged loans and private credit, where floating-rate structures compound pressure on already-challenged borrowers. On the other hand, fixed-rate high yield tends to protects borrowers from compounding pressure and enables more predictable cash flow visibility. Meanwhile, Impax remains cautious of sectors facing structural or cyclical headwinds.
As investors face the challenge of projecting the duration of the conflict in Iran and both near-term and longer-term implications, conviction is difficult to achieve. However, Impax finds that the combination of wider spreads, still-functioning primary markets, solid corporate starting points, and widening dispersion support a constructive but selective view on high yield. This reinforces the view that distinguishing between resilient and vulnerable credit is no longer a luxury, but a primary driver of investment outcomes.
Against a backdrop of elevated macro uncertainty, Impax finds that there is still opportunity for disciplined investors in active high yield strategies. Through the Impax High Yield Bond Fund, the firm continues to focus on selective and rigorous, bottom-up credit research.
Resources
1J.P. Morgan, 2025 High Yield Annual Review, December 23, 2025.
Impax High Yield Bond Fund Risks: The Fund can invest in “junk bonds” which are considered predominately speculative with respect to the issuer’s continuing ability to make principal and interest payments when due. Yield and share price will vary with changes in interest rates and market conditions. Investors should note that if interest rates rise significantly from current levels, bond fund total returns will decline and may even turn negative in the short term. There is also a chance that some of the fund’s holdings may have their credit rating downgraded or may default. The Fund is actively managed. The investment techniques and decisions of the investment adviser and the Fund’s portfolio manager(s), including the investment adviser’s assessment of a company’s ESG (Environmental, Social and Governance) profile when selecting investments for the Fund, may not produce the desired results and may adversely impact the Fund’s performance, including relative to other Funds that do not consider ESG factors or come to different conclusions regarding such factors. Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
The statements and opinions expressed are those of the author as of the date of this report. All information is historical and not indicative of future results and subject to change. This information is not a recommendation to buy or sell any security. Past performance does not guarantee future results. An investment in Impax Funds involves risk, including loss of principal.
Impax Asset Management LLC is investment adviser to Impax Funds. Impax Funds are distributed by Foreside Financial Services, LLC. Foreside Financial Services, LLC is not affiliated with Impax Asset Management LLC.
You should always consider Impax Funds’ investment objectives, risks, and charges and expenses carefully before investing.
For this and other important information, please obtain a fund prospectus by calling 800.767.1729 or visiting www.impaxam.com. Please read the prospectus carefully before investing.
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