European credit markets are ripe for events driven investing.
Idiosyncratic opportunities are rising in an increasingly late-cycle market exhibiting rising dispersion and periodic bouts of volatility. Such a backdrop requires a dedicated portfolio approach and asset class flexibility to exploit the opportunity set, navigate market stress and deliver uncorrelated returns.
The market for credit event investing is under-served by existing providers.
Most hedge funds are set up to target double-digit returns, which they need to justify high fees. But few consistently achieve performance targets and often take significant credit, leverage and/or liquidity risks trying to achieve performance goals.
And we believe there is a fundamental flaw in many credit funds’ model: Only being able to short credit (and not equities) means most funds are not maximising the opportunity set at many points in the economic and credit cycles.
Our approach is pragmatic and focuses on delivering solid risk-adjusted outcomes for our clients.
A mid-to-high single-digit return target is realistic and right for investors in our Credit Events Fund. We believe this is achievable and sustainable with a concentrated but balanced risk approach. Meanwhile, our fees are competitive.
To achieve this, we look to capitalise on the misplacing of securities that can occur when major corporates events or catalysts create anomalies.
We utilise a real-time quantitative flagging tool – the Oakbrook Capital flags platform as part of our investment process. Oakbrook Capital model equity, credit and fixed income asset classes (both cash and derivative) – we believe this is rare in the UCITS market. Oakbrook Capital turns data into potential opportunities for the Oakbrook Capital team who focus on a current defined universe of 600 corporate and financial event names that have been historically tracked, often invested and analysed.
Our Investment Team conducts the fundamental analysis of each idea to provide the qualitative rigor and insight that deepens our conviction in each investment.
Our pragmatism extends to how we build portfolios.
Once we have identified an opportunity and analysed it thoroughly, we consider how best to implement it by choosing our preferred investment instrument. Our primary focus is on credit. But our remit is flexible, so whether we are investing in the long or short side, we can use high yield bonds, financials, CDS or equities to achieve our objectives.