Alpha Engine Perspectives October 23, 2026 • 19 min read The Case for Systematic High Yield: Seeking to Enhance Multi-Manager Portfolios Thr

Systematic high yield should complement, rather than replace, discretionary managers in multi-manager portfolios because its rules-based process can add a distinct source of alpha and diversification.

• The correlation matrix covers excess returns from October 2021 to June 2026 and shows meaningful overlap among nine traditional managers, including correlations as high as 0.91.
• Loomis Sayles’ systematic US high yield strategy showed negative correlations with the nine discretionary managers, ranging from -0.10 to -0.57, including -0.27 with the referenced top Nasdaq eVestment fundamental peers as of June 30, 2026.
• Systematic credit investing has become more viable as granular credit data, computing power and fixed-income ETF liquidity have improved, reducing the practical barriers created by opaque and finite-life corporate bonds.
• Discretionary managers can provide deep analysis of complex, idiosyncratic credits, while systematic strategies offer consistent coverage and may perform particularly well when dispersion is high.
• Loomis Sayles translates its fundamental credit principles into factors and models using former credit analysts, quantitative researchers and data scientists, without relying on real-time recommendations from its fundamental research team.

Takeaway: Institutional investors should consider combining systematic and discretionary high yield exposure to improve portfolio efficiency, while recognizing that the analysis uses gross returns, third-party eVestment data and past performance does not guarantee future results.