Search for income prompts launch of credit fund

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Natixis Investment Managers (Natixis) yesterday announced that its flagship global multi-asset credit strategy is to be made available to Australian wholesale investors via a new local investment fund, the World Multi-Asset Credit Fund (the Fund). The Fund replicates the world credit asset strategy which currently has $US2.9 billion in funds under management and was launched in 2013 by Natixis affiliate manager Loomis, Sayles & Company (Loomis Sayles).

The Fund seeks to maximise risk-adjusted return potential by investing in in global investment grade credit, global high yield credit, bank loan, securitized, and emerging markets sectors based on the current phase of the global credit cycle. Portfolio investment decisions are made on the basis of top-down and bottom-up research undertaken by Loomis Sayles’ alpha strategies team. The Fund is co-managed by portfolio managers Andrea DiCenso, Tom Fahey and Kevin Kearns.

Managing Director of Natixis in Australia, Louise Watson, commented, “Investors are telling us they want a range of fixed-interest securities in their portfolios, to provide diverse sources of income – by geography, industry and sector. However, some investors may not have the resources to manage such a diverse portfolio. Outsourcing the asset allocation decisions between the wide range of credit asset classes on offer, allows the investors to be nimble and act on opportunities within fixed interest as they arise. Quite a few have told us that by the time they act on an opportunity, it’s too late, and they’ve missed the boat.”

The Fund aims to offer investors a diversified income portfolio, made up of a range of credit securities including global investment grade credit, global high-yield credit, bank loans and emerging markets.

Co-portfolio Manager Kevin Kearns, explained, “Our investment process is fundamentally research-driven, but it is also tactically opportunistic in that we move quickly to capture credit risk premiums around the world in a range of asset classes and credit instruments,” Mr Kearns explained.

Mr Kearns went on to stress the importance of understanding credit cycles. According to Mr Kearns, to really benefit from potential opportunities in credit markets, an investor must first analyse where a country is in its credit cycle, then determine the securities with the highest risk premia opportunities for that specific regime within the cycle.

“By looking at credit opportunities in this way and adjusting our portfolio accordingly, we offer investors the chance to act quickly, both offensively and defensively, and to increase their exposure to diversified sources of income,” he said.

Ms. Watson ended by saying that that she believes that this strategy can deliver strong returns in this low yielding environment.

“Now is the right time for Australian investors to seriously consider a multi-asset credit strategy. These strategies, where the manager understands the global credit cycle and the upside and downside of every single security and what is driving the value of each company, are ideally suited to the current low interest rate, high volatility environment. And they should become even more helpful as rates begin to normalise. Global markets move quickly – and that’s why an active, research-driven approach is the best way to identify where income opportunities are right now, and move quickly to capture them,” Ms. Watson said.

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