RWC Partners has launched the RWC Distressed Convertibles Fund, which offers investors the ability to take advantage of pricing anomalies in the high yielding sectors of the convertible
RWC Partners has launched the RWC Distressed Convertibles Fund, which offers investors the ability to take advantage of pricing anomalies in the high yielding sectors of the convertible bond asset class.
RWC Partners sees significant profit opportunities resulting from hedge fund deleveraging and the Lehman bankruptcy which led to heavy selling pressure in convertible bonds. This selling is generating extreme valuation anomalies, particularly in certain niche areas, as normal pricing mechanisms have broken down and the prices of many illiquid securities collapsed.
The RWC Distressed Convertibles Fund has been launched with a two year lock-up. This is to ensure that the portfolio can be managed to maximise the opportunities available in the illiquid sectors of the market. It is long only and invests in listed convertible bonds, holding these higher yielding securities in anticipation of the gradual normalisation of the asset class. The portfolio will be diversified across securities, sectors and geographies to mitigate credit risk.
The fund sits alongside the other funds managed by Miles Geldard and his team. The Ucits III RWC Global Convertibles Fund and RWC Strategic Reserve Fund now have approximately USD1bn in AUM having been launched at the beginning of 2007.
Peter Harrison, chief executive of RWC Partners (pictured), says: ‘We are delighted to have launched the RWC Distressed Convertibles Fund in such a challenging environment. Miles and his team have generated very strong performance, across their funds, since launch at the beginning of 2007 and it is a credit to them that investors have committed additional capital at this time.
‘The limited dealing points and lock-up have provided challenges for clients but we strongly believe that this is the only prudent way to exploit the current valuation anomalies, particularly in a weak credit environment and, ultimately, will provide more rewarding performance for our investors."
