American Beacon SiM High Yield Opportunities Fund R5 (SHOIX)

Overview

The described fund specializes in investments primarily focused on non-investment grade securities, often referred to as "high-yield" or "junk" bonds. These securities are deemed to be below investment grade by major rating agencies, which implies a higher risk compared to investment-grade bonds. The strategy of the fund aims to generate higher returns by taking on a greater risk, which can be appealing for investors looking for growth opportunities beyond traditional investment-grade securities. The fund's approach includes investing at least 80% of its net assets, plus any borrowed funds, in non-investment grade securities. This includes financial instruments that provide exposure to such securities, indicating a broad potential scope of investment opportunities within the non-investment grade market. An important aspect of the fund's strategy is its flexibility in terms of geographic and issuer diversification. It is open to investing in securities of foreign issuers, including those located in emerging markets, which could introduce additional layers of risk and opportunity—such as currency risk, geopolitical risk, and the potential for higher growth rates compared to developed markets. Furthermore, the fund does not impose limitations on the maturities of the debt securities it purchases and is not restricted to buying only rated securities. This allows the fund management team a high degree of flexibility in constructing the portfolio according to its view of the risk-reward landscape in the non-investment grade bond market.

Products and Services

• Non-Investment Grade Securities

These are the primary focus of the fund's investment strategy. Non-investment grade securities, also known as junk bonds, offer higher yields compared to investment-grade bonds to compensate for their higher risk of default. Such securities can be an attractive option for investors willing to accept greater risk for the potential of higher returns.

• Financial Instruments with Exposure to Non-Investment Grade Securities

The fund also invests in financial instruments that provide exposure to non-investment grade securities. This can include derivatives, structured products, or other financial instruments that are linked to the performance of junk bonds. This method allows the fund to potentially enhance returns or manage risk in a more flexible manner.

• Securities of Foreign Issuers and Emerging Markets

Expanding beyond domestic markets, the fund invests in securities of foreign issuers, including those in emerging markets. This diversifies the fund’s holdings geographically and exposes investors to the growth potential and diversification benefits of emerging markets, albeit with increased risks such as currency volatility and political instability.