Schroders to showcase non-correlated CQS credit fund in Germany, Austria

Schroders is to run a roadshow through Germany and Austria next month for the regulated CQS Credit hedge fund on the English asset manager’s GAIA platform, after the manager made 6.8% since launch in April.

The English have a phrase, ‘to make hay while the sun shines’ – to make the most in good times – but the Schroder GAIA CQS Credit fund under lead manager Simon Finch (pictured) made hay while rain poured on markets.

Germans seem to be recognising this ability, as Schroder said they were a key part of the fund’s $142m asset growth since launch.

While the fund made nearly 7%, global shares gauged in US dollars fell about 9%. The fund’s own comparative benchmark of three month Libor, made 0.42% over the same period.

From the start of April to end August, unregulated hedge funds investing in corporate credit fell about 1.7%, according to Hedge Fund Research.

Achim Kuessner, managing director of Schroder Investment Management GmbH, said: “This shows that our concept, laid out in 2009, has borne fruit to put experienced and established Ucits managers of alternative products on our platform.

“The investor interest in Ucits III-regulated alternative investment strategies is, as ever, very large.”

The long/short fund of CQS invests predominantly in corporate bonds of businesses in Europe and the US, aiming to make three-month Libor plus 4% to 8% a year. It is characterised by a relatively low volatility and little or negative correlation to risk asset classes, Schroders said.

Finch is expecting higher volatility in his markets, but feels the climate of meagre interest rates and economic turbulence provide a good basis for generating alpha, returns not correlated to market direction.

The climate recently has been hostile to many strategies. It included heightened volatility after the EU summit in June, the second rescue package for Greece and concerns over the debt mountain America faced.

In July Finch built short positions through credit default swaps in businesses in Europe’s periphery. In the US he increased positions in banks and the health sector. Schroder said: “He works on the assumption that the health sector will continue to suffer from the curbing of the American healthcare insurance, Medicare.”

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