The multi strategy credit fund, which is domiciled in Ireland, is to be managed by Fraser Lundie, co-head of Hermes credit, and Raphael Muller, senior credit portfolio manager. They are targeting a 7% annualised return.
Hermes said the fund will aim to deliver investors high-yield like returns with significantly lower volatility and capital preservation characteristics. The fund had $242m under managment at launch.
“Five years into the high-yield bull market, investors continue to seek strong returns but are wary of valuation and liquidity risks,” Lundie said. “By combining high-conviction, long-only investments with a range of defensive market-neutral trades, the Hermes multi strategy credit fund aims to consistently deliver positive risk-adjusted returns,” he added.
“We believe that the market-neutral positions will insulate the portfolio’s performance in periods of heightened volatility,” Reznick said. “By focusing on security selection, rather than issuer selection alone, we aim to exploit differences in relative value among the bonds, loans and derivatives in companies’ capital structures,” he added.
As well as the UK, the product is currently available for sale in Belgium, Finland, Norway, Sweden, Luxembourg, Denmark, Netherlands. It is also due to be registered in France and Germany.