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Alternative Market Briefing

US credit strategies provide good returns for BHCC

Wednesday, November 28, 2012

by Beverly Chandler, Opalesque London:

2012 has proved a profitable year for the Brevan Howard Credit Catalysts Ltd. (BHCC) fund which has enjoyed a year to date return of 12.7% and seen assets under management increase to $183.5m, while it sits at a discount of about 3.5%.

The fund is the listed feeder fund which feeds into the $2.9bn BHCC Master Fund, managed by David Warren of DW Investment Management, a New York-based manager in the specialist credit strategy, trading across a range of opportunities in the credit markets: mortgage-backed securities; distressed corporate credit; performing corporate strategies and structured corporate strategies.

In an interview with Opalesque, Charlotte Valeur, BHCC Chairman said: "We offer nice returns and it’s clearly a product that gives investors exposure in an area they couldn’t trade in themselves."

The fund does require a relatively high degree of sophistication from its investors. DW Investment Management achieved the returns this year with techniques that have largely played out the way they anticipated. The investment style is to invest in securities that have some type of structural complexity, albeit in mortgage or corporate debt.

It’s been a good year for mortgage backed securities in the US, partly because the previous year was disastrous and prices were too low in contrast to the fundamentals of US housing. Prices finally reached the bottom and have ......................

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