Quick Facts
Inception Date:5/19/19957/1/2019
Expense Ratio:1.02%0.87%
Total Net Assets:$186.83 Million  (3/31/20)
Category:High Yield Bond
Benchmark:ICE BofAML U.S. High Yield
Dividend Distribution:Monthly
Related Material:
   Fund Fact Sheet Q1 2020
   PM Commentary Q1 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 641 High Yield Bond funds as of 5/31/20.

Performance (%)

As of 5/31/203 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO HIGH YIELD FUND - Investor-4.31-5.24-
BUFFALO HIGH YIELD FUND - Institutional-4.18-
  ICE BofAML U.S. High Yield Index-4.22-5.700.352.654.066.516.756.856.85
  Lipper High Yield Bond Funds Index-5.19-6.95-1.201.933.045.835.595.335.59
  Morningstar High Yield Bond Category-4.61-6.06-0.781.742.905.485.575.685.59
As of 3/31/203 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO HIGH YIELD FUND - Investor-12.52-12.52-6.67-0.121.474.294.985.826.35
BUFFALO HIGH YIELD FUND - Institutional-12.50-12.50-6.620.001.604.445.145.976.50
  ICE BofAML U.S. High Yield Index-13.12-13.12-7.450.552.675.506.226.346.55
  Lipper High Yield Bond Funds Index-14.29-14.29-8.47-0.181.684.805.044.785.28
  Morningstar High Yield Bond Category-12.70-12.70-7.67-0.181.664.525.055.175.31
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 3/31/20)
Upside Capture76.16
Downside Capture86.97
Sharpe Ratio-0.25
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.
2020 Distribution Dates:

Record Date: July 17, 2020 | Payable Date: July 20, 2020

Record Date: August 17, 2020 | Payable Date: August 18, 2020

Record Date: September 17, 2020 | Payable Date: September 18, 2020

Record Date: October 19, 2020 | Payable Date: October 20, 2020

Record Date: November 17, 2020 | Payable Date: November 18, 2020

Record Date: December 17, 2020 | Payable Date: December 18, 2020

Net Investment
Short-Term Capital
Long-Term Capital
6/17/206/18/20$10.71 (Inv)

$10.69 (Inst)




5/18/205/19/20$10.11 (Inv)

$10.10 (Inst)




4/17/204/20/20$10.07 (Inv)

$10.06 (Inst)




3/17/203/18/20$9.46 (Inv)

$9.45 (Inst)




2/18/202/19/20$11.30 (Inv)

$11.29 (Inst)




1/17/201/21/20$11.27 (Inv)

$11.26 (Inst)




For historical distributions, click here.


Portfolio Characteristics
(As of 3/31/20) 
# of Holdings136
3-Yr Annualized Turnover Ratio33.06%
Average Duration3.44 years
Average Maturity6.55 years
30-day SEC Yield4.98%
Top 10 Holdings
Name of Holding% of Net
Cerence (Term Loan B, 9/30/24)2.83%
Consolidated Communications (6.500%, 10/1/22)2.35%
MacDonald Dettwiler (Term Loan B, 10/4/24)2.25%
Builders FirstSource (5.000%, 3/1/30)1.93%
Brunswick (7.375%, 9/1/23)1.92%
Nuance Communications (1.500% , 11/1/35)1.87%
Quad Graphics (7.000%, 5/1/22)1.77%
Phillips Van Heusen (7.750%, 11/15/23)1.73%
Treehouse Foods (6.000%, 2/15/24)1.60%
Cogent Communications (5.625%, 4/15/21)1.59%
As of 3/31/20. 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 3/31/20. Allocation percentages may not equal 100% due to rounding.
Sector Weighting
As of 3/31/20. 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.
Loan Duration
Duration Breakout (%)*
10+ Years0.00
7-10 Years0.97
5-7 Years8.97
3-5 Years27.14
1-3 Years27.83
0-1 Years16.35
*Excludes Bank Loans and Converts.
Loan Quality
Quality Breakout (%)
A & Above0.00
Non Rated13.23
All ratings are as of 3/31/20. Standard & Poor’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 D (lowest grade); ratings are subject to change without notice. Not Rated (NR) indicates that the debtor was not rated by an NRSRO and should not be interpreted as indicating low quality.


Paul Dlugosch, CFA
Portfolio Manager

22 Years of Experience

 View full bio

Jeff Sitzmann, CFA
Portfolio Manager

32 Years of Experience

 View full bio

Jeff Deardorff, CFA
Portfolio Manager

21 Years of Experience

 View full bio



(As of 3/31/20) — After producing positive returns in the past three consecutive quarters of 2019, the U.S. high yield sector suffered a significant correction during the period, driven by the
COVID-19 outbreak and plunging crude oil prices. The Saudi-Russian power struggle over oil output and the virus pandemic overshadowed everything in the month of March. The U.S Federal Reserve (the “Fed”) enacted extraordinary measures including slashing interest rates, removing the caps on the size of asset purchases, and restarting the Term Asset-Backed Securities Loan Facility (TALF). Congress passed a $2+ trillion
economic relief package in concert with the Fed’s moves, but in spite of these efforts, the flight to quality ensued quickly and painfully. The 10-year Treasury bond returned 12.09% during the quarter, while the S&P 500 Index logged a return of -19.60%.

The flight to quality along with increased market volatility resulted in high yield mutual funds experiencing cash outflows of about $16.7 billion during the quarter. In fact, the $13 billion outflow in the month of March was the second largest monthly outflow for high yield, trailing only the $13.6 billion outflow in June 2013. This follows a $3 billion inflow in the previous quarter and a $3.2 billion inflow in the 3rd quarter of 2019. The
$73 billion in high yield new issuance during the quarter was essentially all brought to market in January and February as demand vanished in March. In fact, only five bonds, totaling $4.2 billion, priced during the month of March compared to March 2019’s volume total of $26.6 billion.

During the quarter, the yield on the 10-year U.S. Treasury Bond declined from 1.92% to 0.67% as investors scrambled to safety. The U.S. high yield universe as a whole was on the opposite side of that flight to quality, with negative returns in every industry, sector, and credit rating silo. According to data from JP Morgan, the highest quality end of the high yield credit spectrum (i.e., split BBB and BB), suffered less than the lower
end of the quality spectrum. The split BBB segment produced the smallest loss at -8.35% and split B was the worst performer with a -24.56% loss.

According to data from JP Morgan, the U.S. high yield market’s spread to worst for the period was 9.49%, which was 525 basis points (bps) wider than at year-end and 339 bps wider than the 20-year historical average of 610 bps. The yield to worst for the high yield market at quarter end was 10.00%, above the 20-year average of 8.70%, and above the yield of 6.84% as of December 31st.


(As of 3/31/20) — The Buffalo High Yield Fund (BUFHX) decreased -12.52% for the quarter, compared to a decline of -13.12% for the ICE BofAML U.S. High Yield Index. The Fund also declined less than the Lipper High Yield Bond Funds Index, which produced a return of -14.28%
for the quarter.

Fund Composition by Asset Class
Straight Corporates68.1%65.4%64.7%65.0%55.6%
Bank Loans20.2%17.2%15.2%16.0%16.2%
Preferred Stock0.0%0.0%0.0%0.0%1.1%
Convertible Preferred0.6%0.6%0.0%0.0%0.0%
Common Stocks0.8%0.7%1.4%1.2%1.7%
Approximate Rate and Contribution of Return from the Fund’s Various Asset Classes in 4Q19
Unweighted ReturnContribution to Return
Straight Corporates2.2%1.31%
Bank Loans2.4%0.37%
Preferred Stocks6.4%0.04%
Convertible Preferred0.0%0.00%
Common Stocks6.6%0.09%


There were only a handful of securities that delivered positive returns for the Fund, with the three top contributors being Brunswick 7.375% corporate bonds, Dermira 3.000%
convertible notes, and Holly Energy Partners 6.000% corporate notes. Brunswick is an investment grade credit with a high coupon and a relatively short maturity date of 2023, which protected it somewhat from the downturn. Dermira was acquired by Eli Lilly in March, and the notes were converted at a small premium to par. Holly Energy Partner notes were called by the company in February at a premium.


Specific securities that detracted the most from performance include MPLX 6.875% corporate bonds, Energy Transfer common equity, and US Silica bank debt. All three
companies are directly exposed to the energy exploration and production (E&P) sector, which was significantly hurt by plummeting crude prices.


(As of 3/31/20) — Until March, 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 a three-year high of 3.54% in March, which was up 91 bps from the 2.63% level in December 2019, and above the 3.44% long-term average.

We are concerned first and foremost about the ongoing COVID-19 pandemic and the fallout on global economies, while previous issues such as China trade talks and the upcoming presidential election become 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 ended the quarter with 136 positions unchanged from the previous quarter’s level (excluding cash). We will continue to deploy the Fund’s 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 preferreds.

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 3 stars among 641 for the 3-year, 3 stars among 544 for the 5-year, and 3 stars among 346 High Yield Bond funds for the 10-year period ending 5/31/20.

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. ©2020 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.