Former UBS fixed income head establishes New York boutique

A former co-head of global fixed income at UBS has established Coherence Capital Partners, a diversified fixed income manager based in New York.

The launch of the fixed income boutique under Sal Naro (pictured) comes at a time some allocators favour fixed income markets, and relative-value trades, rather than managers making brave directional bets.

Most recently Naro was vice chairman of Jefferson National Financial Corp, and he was also chief executive of Jefferson National Asset Management.

Coherence Capital is being established as a result of a management buyout of Jefferson National’s core insurance unit, and Naro has recruited several senior managers from the group to work at Coherence.

Naro was also co-managing partner at $4.4bn asset manager Sailfish Capital, about half of whose assets were in hedge fund strategies.

Coherence Capital will manage both hedge and non-hedge fixed income strategies, as well as conservatively managing money using the insurance company’s guidelines.

It will monitor the risk of a portion of their reinsurance contracts.

Naro will be joined by Vincent Mistretta, former head of portfolio management at Jefferson National Asset Management; Greg MacKay, its former chief operating officer; and Robert Del Grande, its former chief financial officer.

David McClean, former chief compliance officer at Sailfish, will also join Coherence.

Naro said: “Coherence Capital’s primary thesis is to invest in companies that show strong performance in their balance sheets with earnings that meet and beat expectations, while taking short positions in credits that miss earnings expectations and suffer continued weakness in their primary business metrics.”

He was also executive vice president at data providers Markit, and global head of credit trading at Bear Stearns.

It will invest in bonds, loans, default insurance contracts, index and structured products. Its strategies will include investing across the capital; structure of companies (capital structure arbitrage), in instruments for specific corporate events, on the comparative value of different investments, and theme-based momentum trading.

Hedge fund allocator FRM said in a report today it had felt since 2009 that relative-value trades and arbitrageurs would do well after the crisis.

“Relative value and arbitrage strategies, especially those which produce returns through liquidity provision, would outperform other strategies in the post-crisis environment. These strategies are especially suited to produce returns in directionless markets, and the pullback of investment banking from proprietary trading and market-making has meant less competition for profitable trades.

“If the 2012 market environment is similar to 2011, portfolios which emphasize managers who are non-directional in nature and produce returns through liquidity provision should continue to outperform.”

Relative-value fixed income strategies were among the best hedge fund performers in last year’s choppy markets, according to data providers Hedge Fund Research.

Hedge funds overall fell by 4.8%, pulled down by the directional strategies of equity long/short (8% losses) and emerging markets hedge funds (down 12.9%).

By contrast, relative-value hedge funds made 0.6%, fixed income corporate hedge funds made 1% and asset-backed fixed income made 6.7%.


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