Convert-arb specialist Credere Capital unveils higher-volatility relative value hedge fund
Credere Capital, a convertible arbitrage-focused hedge fund led by well-known industry veteran Oliver Dobbs (pictured), is launching a higher-volatility, higher-return version of its Trium Credere strategy later this year to tap into growing investor demand for such strategies.
The Cayman-registered Trium Credere Circle Fund – set to roll out in Q3 – will trade the same arbitrage and relative value strategy as the existing Trium Credere flagship, investing across a range of hybrid securities and derivatives markets, but will target approximately double the exposure.
Credere founder and chief investment officer Dobbs said the new strategy aims to capitalise on “significant” investor appetite for a higher volatility version of the strategy and increased exposure to convertible bond arbitrage, with the existing Trium Credere strategy demonstrating “truly uncorrelated” returns against underperforming market neutral strategies in risk-off markets.
The Trium Credere Fund has generated an annualised return of 7.8 per cent since inception, during which time it has posted positive returns in 12 out of the 13 down months for equities since the September 2017 launch. The simulated returns of the new Trium Credere Circle Fund would represent annualised returns of 16.3 per cent, with annualised volatility of 6.9 per cent, Credere said.
Convertible bonds and other debt/equity hybrid securities have seen a recent issuance spike, with 2020 volumes reaching USD159 billion over 289 deals, with year-to-date issuance larger than any full year’s issuance since 2007, the firm noted.
“A supportive corporate backdrop and regulatory tailwinds have created a fertile backdrop for global convertible bond arbitrage managers but there remain few established players,” said Dobbs, who will be supported in the new strategy by co-portfolio manager Nicolas Marquez, a recent addition to the firm from BNP Paribas.
“Our edge is to continually identify different inputs to those being priced in by the market, drawing different conclusions and unearthing profitable opportunities.”
Trium Capital co-head Donald Pepper said: “The demand for proven uncorrelated strategies is growing against a backdrop of increasing correlations between equity and bond markets.”