Schroders has launched the Schroder Gaia II NGA Turnaround, a liquid distressed fund.
The fund, the first to be launched on the firm’s Gaia II platform, will be externally managed by New Generation Advisors (NGA), which has a 26 year track record investing in distressed securities.
It will provide a liquid and diversified alternative strategy, uncorrelated to traditional equity and bond markets.
The fund invests in corporate credit and equity securities through fundamentally-driven long and short positions, mainly in North America.
It seeks to capitalise on inefficiencies that exist in the distressed securities market due to lack of understanding of the bankruptcy process and maximise returns from bankruptcies, distressed companies and turnaround situations.
George Putnam, founder of NGA and manager of NGA’s flagship strategy, will be responsible for the fund.
Schroder Gaia II NGA Turnaround, which is non-benchmarked, will target an annualised return of 8-12% net of fees with expected volatility of 10-12%.
Eric Bertrand, director of Gaia platform, said: “We continue to see very strong demand for liquid alternative investment strategies, run by experienced managers with a proven track record over many cycles.
“We’re delighted to launch the first fund on the Gaia II platform with such a high-quality hedge fund manager who has one of the longest, most successful track records in the industry. This is an opportune time to be launching a distressed investment strategy to further widen the range of strategies across both Gaia platforms.”
George Putnam, founder of NGA, added: “With a record level of low quality debt outstanding, we expect the supply of distressed bonds to increase in the coming quarters. However, even if the next big wave of defaults is slow to arrive, distressed opportunities always exist because, even in the best of times, some businesses manage to make mistakes, and we are well positioned to take advantage of these opportunities.”
Gaia II platform is a liquid alternatives platform for externally managed strategies.
First Schroders’ Gaia platform tallies six funds managed by external hedge fund managers (Schroder GAIA Egerton Equity, Schroder GAIA Sirios US Equity, Schroder GAIA KKR Credit, Schroder GAIA Paulson Merger Arbitrage, Schroder GAIA BSP Credit and Schroder GAIA BlueTrend) and one managed internally (Schroder GAIA Cat Bond).
'Excellent growth opportunity'