Redhedge taps into credit market dislocations with new relative value UCITS hedge fund

Andrea Seminar, Redhedge

Redhedge Asset Management has launched a new relative value hedge fund focusing on European investment-grade credit markets, tapping into increased demand from institutional investors.

The Redhedge Relative Value UCITS strategy fuses quantitative and qualitative investment processes, and aims to offer returns decorrelated from broader financial markets.

The fund, managed by CEO and CIO Andrea Seminara, and Voon Kiat Lai, senior portfolio manager, will use fundamental analysis to zero in on credit market dislocations.

Seminara said the UCITS fund will offer institutional investors, such as pension funds and family offices that cannot invest in non-UCITS, access to a market-neutral, low-volatility and risk-averse product.

“Through our relative value investing strategy, we look to achieve steady returns, with low volatility, that are uncorrelated to wider market movements. We take advantage of fair value dislocations in the bond market to form pair trades that are hedges of each other,” Seminara said of the investment strategy.

Voon Kiat Lai added: “The current low-rate environment has led to high cash balances and created a major challenge to invest in non-negative yielding assets, especially in credit markets. Our investment product addresses this issue.”

Relative value-focused hedge fund managers have started 2021 positively, returning 1.3 per cent in January, having gained 3.38 per cent last year, data published this week by Hedge Fund Research shows.

The new UCITS launch replicates the fundamental strategy and investment approach of the London- and Milan-based firm’s alternative investment fund, Redhedge ICAV, which launched in 2015, albeit in a UCITS-compliant framework with greater liquidity.