Kempen launches fund of structured credit funds
Dutch asset manager Kempen Capital Management has launched the Diversified Structured Credit Pool (“DSCP”), which consists of a fund of long-only structured credit funds selected by Kempen.
It provides investors with exposure to three structured credit specialists (GoldenTree, LibreMax and One William Street).
Kempen has been invested in structured product funds since 2009, as part of its flagship fund of hedge funds Kempen Orange Investment Partnership.
DSCP currently targets net returns of 4 – 6% p.a. (in USD; unhedged) and will invest in a mix of investment grade (IG) and sub-IG bonds, with a preference towards IG bonds.
Duration is expected to be 2 – 3 years and geographically, the fund is expected to be 80 – 85% allocated to the US and 15 – 20% to Europe.
Structured credit includes a number of assets among which residential mortgages (RMBS), commercial mortgages (CMBS), senior secured loans (CLO’s), and consumer loans (Consumer ABS).
Remko van der Erf, co-head Hedge Fund Solutions at Kempen, said that while structured credit has been overlooked by many investors given the higher complexity, lower liquidity and eligibility criteria involved.
“While it is a more complex asset class, in return it provides higher spreads than similarly rated corporate bonds, as well as protection against rising rates, and exposure to the consumer market,” commented van der Erf.
“By working with the right partner who can help to navigate the market, professional investors can access a niche alternative to high yield,” he concluded.