Jeff Klingelhofer, Aristotle Pacific

Jeff Klingelhofer spent the early part of his career at Pimco — Newport Beach, Tokyo, and London — before an MBA at the University of Chicago and a summer at a five-person hedge fund reset his expectations for what an investment career could look like. He landed at Thornburg as employee number three on the taxable fixed income side, grew into Head of Investments over the next decade-plus, and in 2024 came back home to Newport Beach to join Aristotle Pacific. Aristotle has been around for 15 years, manages roughly $16 billion across a mutual fund lineup, and in July of this year launched its first three ETFs.

In this episode, Jeff walks through the relative value investment philosophy that anchors the entire suite — ARCP (Core Plus), ARMS (Multi-Sector Income), and SDUR (Short-Term Income) — and makes one of the more concrete arguments for it you'll hear on the show. His centerpiece example: in February 2020, American Airlines priced a five-year corporate high yield bond at 3.75%, while the same issuer's equivalent Enhanced Equipment Trust Certificate was available at effectively the same yield. Same issuer, same tenor, same risk. One month later — after COVID hit — the corporate bond was trading at 27 cents on the dollar; the EETC was at 65 cents. That's the relative value process at work, and Jeff explains why most fixed income shops are structurally unable to identify those opportunities because they're organized around distinct silos rather than a unified relative value lens.

Jeff also gets into how each of the three funds fits into different parts of an advisor's fixed income sleeve, why active management still matters in short duration (SDUR is currently yielding about 5% versus roughly 4% on comparable treasuries), how ARMS is currently positioned toward the low end of its below-investment-grade range because he's not being paid for that risk today, and why the funds are running slightly long duration as a hedge against credit exposure. He also delivers a genuinely substantive macro read on why the current Fed chair — facing only high inflation for the first time — is likely to have a different reaction function than his predecessors.