Hermes launches absolute return credit fund
Hermes Investment Management has added to its global fixed income offerings with the launch of the Hermes Absolute Return Credit fund.
The Ucits fund, which launched on 29 May 2015, aims to target a positive investment return (absolute return) over a rolling 12 month period irrespective of market conditions.
The fund will be managed by Fraser Lundie, co-head of Hermes Credit and Raphael Muller, senior portfolio manager.
Principal members of the Hermes Credit team have been managing relative-value credit strategies together since 2004 and this fund further strengthens the team’s investment offering. The Hermes Multi Strategy Credit strategy has returned 12.8% cumulative since inception and the strategy celebrated its two-year anniversary on 1 June 2015.
Meanwhile, the Hermes Global High Yield Bond Fund has returned 54.71% over the five year period since inception, compared to its benchmark which returned 48.83% in the same period. The fund has a five star Morningstar Ratin, based on the fund’s total returns, adjusted for risk and sales charges, relative to other funds in its Morningstar category.
Fraser Lundie, co-head of Hermes Credit, said: “The Hermes Absolute Return Credit Fund is a market neutral solution and follows our highly successful philosophy that investors must look beyond issuers and focus on a multi strategy approach which incorporates both long and short investments across multiple security types including loans, bonds and CDS.
“In the past decade we have seen the globalisation of credit markets in the US, Europe and Emerging Markets and in order to fully maximise these opportunities on offer, investors must invest with a truly global mandate, which is core to our offerings.”
Mitch Reznick, co-head of Hermes Credit, said: “Through our investment process of sourcing dynamic bottom-up ideas whilst only allocating capital to geographical, sector and asset classes we deem to be of attractive relative value we have been able to access compelling areas of the market that others overlook or are unable to invest in due to inflexible strategies. Building funds in the way we build ours allows us to take advantage of these opportunities.”
The Hermes Absolute Return Credit fund will sit within IA Target Absolute Return and all investments will be hedged back to USD. It will target 100 to 150 names and is expected to have an overall credit quality of low investment grade. The fund is available to institutional and wholesale investors in the UK, Ireland, Germany, Austria, France, Denmark, Finland, Norway, Sweden and Benelux.