Quick Facts
Inception Date:5/19/19957/1/2019
Expense Ratio:1.03%0.89%
Total Net Assets:$266.14 Million  (12/31/20)
Category:High Yield Bond
Benchmark:ICE BofAML U.S. High Yield
Dividend Distribution:Monthly
Related Material:
   Fund Fact Sheet Q4 2020
   PM Commentary Q4 2020
   Summary Prospectus
Fund Objective & Investment Process

The investment objective of the Buffalo High Yield Fund is primarily current income, with long-term growth of capital as a secondary objective. The High Yield Fund normally invests at least 80% of its net assets in higher-yielding, higher-risk debt securities rated below investment grade by the major rating agencies (or in similar unrated securities), commonly known as “junk bonds”. Debt securities can include fixed and floating rate bonds as well as bank debt and convertible debt securities.

While the Fund maintains flexibility to invest in bonds of varying maturities, the Fund generally holds bonds with intermediate-term maturities. With respect to the remaining 20% of the Fund’s net assets, the Fund may invest in investment grade debt securities, U.S. Treasury Securities (typically with maturities of 60 days or less), money market funds, and equity investments, including dividend paying stocks and convertible preferred stocks.


Our team brings many years of credit research experience to the bond market. We are proud to have provided our shareholders with what we believe is a conservative approach to investing in high yield bonds since 1995.

Jeff Sitzmann, Portfolio Manager

Morningstar Rating


Overall Morningstar Rating™ of BUFHX based on risk-adjusted returns among 631 High Yield Bond funds as of 1/31/21.

Performance (%)

As of 1/31/213 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO HIGH YIELD FUND - Investor7.370.429.556.246.655.736.296.657.07
BUFFALO HIGH YIELD FUND - Institutional7.460.449.716.376.805.886.446.807.23
  ICE BofAML U.S. High Yield Index6.390.386.575.798.866.447.267.307.18
  Lipper High Yield Bond Funds Index6.490.415.315.007.905.766.095.985.94
  Morningstar High Yield Bond Category5.920.255.194.607.125.346.006.165.89
As of 12/31/203 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO HIGH YIELD FUND - Institutional7.649.439.436.386.425.966.536.997.24
  ICE BofAML U.S. High Yield Index6.486.176.175.898.436.627.357.617.19
  Lipper High Yield Bond Funds Index6.444.814.815.147.445.936.156.305.95
  Morningstar High Yield Bond Category5.974.914.914.746.755.556.106.475.90
For performance prior to 7/1/19 (Inception Date of Institutional Class), performance of the Investor Class shares is used and includes expenses not applicable and lower than those of Investor Class shares.Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower of higher than the performance quoted and can be obtained here. Performance is annualized for periods greater than 1 year. Each Morningstar category average represents a universe of funds with similar objectives.
3 Year Risk Metrics
BUFHX vs ICE BofAML U.S. High Yield Index (As of 12/31/20)
Upside Capture92.94
Downside Capture86.48
Sharpe Ratio0.53
Hypothetical Growth of $10,000
This chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on the Inception Date. Assumes reinvestment of dividends and capital gains. This chart does not imply future performance.
2021 Distribution Dates:

— Record Date (3/17/21); Payment Date (3/18/21) – Ordinary Income & Capital Gains, if any

— Record Date (4/19/21); Payment Date (4/20/21) – Ordinary Income & Capital Gains, if any

— Record Date (5/17/21); Payment Date (5/18/21) – Ordinary Income & Capital Gains, if any

— Record Date (6/17/21); Payment Date (6/18/21) – Ordinary Income & Capital Gains, if any

— Record Date (7/19/21); Payment Date (7/20/21) – Ordinary Income & Capital Gains, if any

— Record Date (8/17/21); Payment Date (8/18/21) – Ordinary Income & Capital Gains, if any

— Record Date (9/17/21); Payment Date (9/20/21) – Ordinary Income & Capital Gains, if any

— Record Date (10/18/21); Payment Date (10/19/21) – Ordinary Income & Capital Gains, if any

— Record Date (11/17/21); Payment Date (11/18/21) – Ordinary Income & Capital Gains, if any

— Record Date (12/2/21); Payment Date (12/3/21) – Capital Gains, if any

— Record Date (12/17/21); Payment Date (12/20/21) – Ordinary Income, if any
Net Investment
Short-Term Capital
Long-Term Capital
2/17/212/18/21$11.89 (Inv)

$11.88 (Inst)




1/19/211/20/21$11.83 (Inv)

$11.82 (Inst)




For historical distributions, click here.


Portfolio Characteristics
(As of 12/31/20) 
# of Holdings138
3-Yr Annualized Turnover Ratio36.78%
Average Duration2.61 years
Average Maturity6.82 years
30-day SEC Yield2.80%
Top 10 Holdings
Name of Holding% of Net
Open Lending (1 mo LIBOR + 6.500%, 3/11/27)2.84%
Nuance Communications (1.500% , 11/1/35)2.24%
Consolidated Communications (6.500%, 10/1/22)2.05%
MPLX (6.875%, 8/15/23)1.86%
Michaels Stores (8.000%, 7/15/27)1.72%
Builders FirstSource (5.000%, 3/1/30)1.70%
Treehouse Foods (4.000%, 9/1/28)1.66%
J2 Global (1.750%, 11/1/26)1.55%
Cerence (Term Loan B, 9/30/24)1.52%
Diebold Nixdorf (8.500%, 4/15/24)1.50%
As of 9/30/20. Top 10 Holdings for the quarter are not disclosed until 60 days after quarter end. Fund holdings are subject to change and are not recommendations to buy or sell any securities.
Asset Allocation
Percentages of Total Assets as of 12/31/20. Allocation percentages may not equal 100% due to rounding.
Sector Weighting
As of 12/31/20. Security weightings are subject to change and are not recommendations to buy or sell any securities. Sector Allocation may not equal 100% due to rounding.
Duration Breakout (%)*
10+ Years0.10
7-10 Years1.13
5-7 Years8.55
3-5 Years26.03
1-3 Years28.18
0-1 Years17.88
*Excludes Bank Loans and Converts.
Credit Quality
Quality Breakout (%)
All ratings are as of 12/31/20. Moody’s is the rating source for the Quality Breakout Table. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO), such as Moody’s or Standard & Poor’s. The firm evaluates the of credit worthiness of an issuer with respect to debt obligations, including specific securities, money market instruments, or other bonds. Ratings are measured on a scale that generally ranges from Aaa (highest grade) to C (lowest grade); ratings are subject to change without notice. Unassigned rating indicates that the debtor was not rated by an NRSRO and should not be interpreted as indicating low quality.


Paul Dlugosch, CFA
Portfolio Manager

24 Years of Experience

 View full bio

Jeff Sitzmann, CFA
Portfolio Manager

34 Years of Experience

 View full bio

Jeff Deardorff, CFA
Portfolio Manager

24 Years of Experience

 View full bio



(As of 12/31/20) — The U.S. high yield sector continued its rally in the quarter, driving bond yields to record lows. Amid stimulus and vaccine optimism, high yield bond prices continued their recovery from the COVID-19 sell-off in March. The high yield market posted positive returns in each month of the quarter (+0.51% in October, +3.93% in November, +2.04% in December) pushing yields to a record low of 4.71%. The 10-year Treasury Bond returned -1.82% during the quarter, while the S&P 500 Index logged a return of 12.15%.

Following a record $47.3 billion inflow in the 2nd quarter of 2020 and a $10.7 billion inflow in the 3rd quarter, high yield funds reversed course, experiencing $3.4 billion of cash outflows in the December quarter. Interestingly, in the months from April to August, high yield funds posted five consecutive months of inflows totaling $59.1 billion, which included the two largest inflows ever recorded in May ($20.5 billion) and April ($17.1 billion). High yield new issuance volume was $99 billion during the quarter, after posting record-setting levels in both the 1st and 3rd quarters of $145.5 billion and $131.9 billion, respectively. Refinancing continued to be the primary use of proceeds, accounting for ~68% of transaction volume in 2020. According to JP Morgan, split BB or B rated issues accounted for the bulk of activity in the quarter (48%) with the heaviest volume coming from Energy (12.7%), Healthcare (12.7%), and Financial (8.8%).

During the quarter, the yield on the 10-year Treasury Bond increased 24 basis points (bps) from 0.68% to 0.92%. Every sector in the U.S. high yield universe and every credit rating silo produced positive returns during the 4th quarter. According to data from JP Morgan, the lower quality end of the high yield credit spectrum (i.e., split B/CCC, non-rated, and defaulted issues) performed better than the higher end of the quality spectrum. The split B/CCC segment produced the largest gain of 9.10% and the BB segment was the worst performer, with a still solid 2.56% gain.

According to data from JP Morgan, the U.S. high yield market’s spread to worst for the period was 444 bps, 159 bps tighter than the preceding quarter and 161 bps tighter than its 20-year historical average of 605 bps. The yield to worst for the high yield market at quarter-end was 4.71%, below the 20-year average of 8.45%, and below the yield of 6.32% at the end of the 3rd quarter.


(As of 12/31/20) — The Buffalo High Yield Fund (BUFHX) increased 7.55% for the quarter, beating out the ICE BofAML U.S. High Yield Index, which gained 6.48% for the period. The Fund also outperformed the Lipper High Yield Bond Funds Index return of 6.44%.

Fund Composition by Asset Class
Straight Corporates55.6%60.1%55.4%60.6%61.0%
Bank Loans16.2%19.1%16.6%16.3%17.2%
Preferred Stock1.1%1.3%1.7%1.5%1.2%
Convertible Preferred0.0%0.0%0.0%0.0%0.0%
Common Stocks1.7%1.0%0.6%0.4%0.1%
Approximate Rate and Contribution of Return from the Fund’s Various Asset Classes in 4Q20
Unweighted ReturnContribution to Return
Straight Corporates5.9%3.73%
Bank Loans2.8%0.48%
Preferred Stocks9.1%0.13%
Convertible Preferred0.0%0.00%
Common Stocks31.0%0.08%


During the quarter, 137 out of the 138 issues in the Fund produced positive returns. The top three contributors were Cerence 3% convertible bonds, Nuance Communications 1.5% convertible bonds, and MPLX 6.875% corporate bonds. Cerence and Nuance are both technology-driven enterprises that reported better-than-expected earnings or guidance during the quarter, and the underlying stocks benefited from the strong demand from investors to own the technology sector. MPLX is a mid-stream energy operator that benefited from a rally in the entire high yield energy sector throughout the quarter.


The K12 Inc. 1.125% convertible bond position was the only security with negative performance during the quarter. Although the company reported strong quarterly results, the convertible bonds were under pressure due to on-going concerns about the sustainability of enrollment trends (boosted by COVID-19) and a few operating challenges (a lost contract and a cyber-attack).


(As of 12/31/20) — Until March 2020, the United States had been enjoying a growing economy with modest inflation that had created a favorable environment for risky assets. However, near the end of February and early March, the COVID-19 pandemic and plummeting crude oil prices wreaked havoc on the markets. The U.S. high yield default rate increased to 3.54% in March, which was up 91 bps from the 2.63% level in December 2019. The trend continued through July, peaking around 6.2% before declining to 5.8% through August and September, before return to peak level of 6.2% during the December quarter. Overall, 88 companies defaulted on $129.6 billion of bonds and loans in 2020.

We are concerned first and foremost about the ongoing COVID-19 pandemic and the fallout on global economies, with the transition to the Biden administration being a secondary focus. We are managing the Fund cautiously yet actively, focusing on high-quality issuers with defensive business models and manageable credit metrics. We will continue to deploy cash in opportunities that we believe offer the most appealing risk/reward tradeoff, with a bias toward shorter durations and less levered credits. Additionally, we believe bank loans offer a more defensive position as they provide senior positioning in the capital structure. Finally, we continue to look for opportunities in convertible bonds and preferred stocks. We ended the quarter with 138 positions, unchanged from the previous quarter’s level (excluding cash).

The opinions expressed are those of the Portfolio Manager(s) and are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security. Earnings growth is not representative of the fund’s future performance.


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Fundamental Approach

We get to know the companies we invest in and learn how they run their business.

Top-Down & Bottom-Up

We identify Top-Down broad, secular growth trends and search for companies from the Bottom-Up.

Proprietary Philosophy

We construct our portfolios based on our own proprietary investment strategy.

Disciplined Investing

Sticking to our disciplined investment strategy ensures we maintain a consistent, balanced approach.

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

The Buffalo High Yield Fund (BUFHX) received 4 stars among 631 for the 3-year, 2 stars among 554 for the 5-year, and 4 stars among 352 High Yield Bond funds for the 10-year period ending 1/31/21.

In each Morningstar Category, the 10% of funds with the lowest measured risk are described as Low Risk, the next 22.5% Below Average, the middle 35% Average, the next 22.5% Above Average, and the top 10% High. Morningstar Risk is measured for up to three time periods (three, five, and 10 years). These separate measures are then weighted and averaged to produce an overall measure for the fund. Funds with less than three years of performance history are not rated. ©2021 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The Morningstar Style Box™ reveals a fund’s investment strategy by showing its investment style and market capitalization based on the fund’s portfolio holdings.

Bond ratings are grades given to bonds that indicates their credit quality as determined by a private independent rating service such as [Standard & Poor’s or Moody’s, etc.]. The firm evaluates a bond issuer’s financial strength, or its ability to pay a bond’s principal and interest in a timely fashion. Ratings are expressed as letters ranging from ‘AAA’, which is the highest grade, to ‘D’, which is the lowest grade. Not Rated category includes holdings that are not rated by any rating agencies.