Wednesday, June 12, 2024

UBP backs corporate credit after bond bloodbath

Swiss investment house UBP says the fixed-income sell-off across credit markets is beginning to produce attractive long opportunities.

The fund of hedge fund group is “cautiously increasing” exposure to low-net corporate credit managers. It revealed a high conviction in distressed credit as rates rise and high inflation persists.

“We do not necessarily see substantially higher default rates from here, but real potential for dispersion, spread widening and volatility; providing a fertile opportunity set for credit managers,” said Kier Boley, CIO of UBP Alternative Investment Solutions, and Fredrik Langenskiöld, senior alts investment specialist, in an update.

“As the recession risk rises over 2022/23 and capital markets remain largely shut, the opportunities for new stressed and distressed positions will also rise.”

After the worst year for bond markets in more than a century, managers in the space ranging from Man Group to Altana are seeing opportunities in corporate credit improve.

UBP was also positive on developed markets macro, convertible arbitrage, multi-strat relative value, systematic RV and short-term systematic.

It was most cautious on currency macro funds and activist credit and event-driven funds.

UBP invested in hedge funds since 1972. It had close to $12bn in alternatives as of September 2020, the most recent figure on its website.

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