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Alternative Market Briefing

Institutions eye private credit over traditional fixed income

Thursday, September 25, 2014

Bailey McCann, Opalesque New York:

Investing in private insurance, realty tax receivables, or investment-grade short-term accounts receivable may not spring to mind as a means of mitigating risk in a portfolio, but one firm, New York-based BroadRiver Asset Management is out to change all that. They're offering what they call a private credit product to institutions that invests in these areas.

"Essentially what you get is a basket of products that behave like fixed income, without the same type of risk as we see in fixed income today," explains BroadRiver Co-CEO Philip Siller in an interview with Opalesque.

With private credit as the primary investment strategy, returns based on demographic life cycles mean that the investment strategies are unaffected by macro shifts. Siller and Co-CEO Andrew Plevin started building out the product in the early 2000's and eventually ended up building and managing Goldman Sachs longevity trading desk. Siller notes that their time at Goldman allowed them to fine tune the strategy, and learn some crucial lessons about this area of the market.

Over time, Plevin and Siller decided to return to doing business on their own and started BroadRiver in 2009. The product is decidedly institutional grade as the investments require investors with a long-term time horizon that also have the resources to invest at the scale required to achieve performance. "With insurance investments, if you just hold a handful of policies, it......................

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