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Alternative Market Briefing

Acito: aligned interests, education are critical to credit investing

Wednesday, May 15, 2013

amb
Chris Acito
Bailey McCann, Opalesque New York:

For $700m multi-manager hedge fund Gapstow Capital Partners, credit investing has a lot to offer. Chris Acito, CEO/CIO of Gapstow recently sat down with Opalesque TV to discuss where his managers are finding opportunity in the credit markets.

According to Acito, Gapstow finds an edge in credit investing by maintaining a broad view of credit opportunities beyond corporate debt or high yield. In addition to these asset classes, Gapstow looks at loans, convertibles and structured products. They also look at consumer debt, commercial real estate and bank investments. For him, diversifying the credit return stream is important and can offer notable upside.

He says that investors should have much more of their portfolio invested in credit strategies through these other asset classes if they want to maintain a truly diversified credit position. "If you go to even a sophisticated institutional investor and you ask them how much is invested in credit, the answer typically comes out to be less than 10% of the overall portfolio," he explains. "Credit is where you take some of that risk either on the principal component, or the timing and amount of payments that are associated with that investment. With that definition, and even using the broader four sub-buckets that we talked about before, again even for a sophisticated portfolio, ......................

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