Dallas-based investment advisor sees increasing HNW interest in credit strategies
High-net-worth clients from in and around the Southern United States are continuing to favour allocations to an array of niche credit strategies, according to a Dallas-based investment advisor.
Ken Shoji, Managing Director and Chief Investment Officer at View Capital Advisors, told Hedgeweek: “In credit, we allocate across the board.” Adding: “We’ve been very selective in looking at niche credit strategies, areas like US non-agency mortgages, US bank trust preferred, high-yield bonds, bank loans, emerging market debt, structured credit – niche parts of the US credit markets.”
View Capital advises on USD1.4 billion for a small group of multi-generational families who are mainly based in Texas and the surrounding Southern United States, such as Louisiana. An estimated quarter of the firm’s clients are based internationally, predominantly in Mexico, and their average client’s portfolio is USD10 million.
Shoji explained that despite the uptick of interest in credit, View Capital takes a cautious approach in reviewing new funds in the space, owing to expenses and elevated valuations, but also describes these strategies as often “less trafficked and less vulnerable to institutional capital coming in to compress returns.”
Elsewhere in the hedge fund space, View Capital has also recently started to consider recommending long-short equity strategies, after a period of skepticism due to the difficulty of finding successful managers.
Shoji stated that current hedge fund allocations are mainly invested in multi-strategy and multi-manager companies, such as Millennium Management, Point72 Asset Management, Balyasny International Asset Management and Elliott Management Corporation, which generate consistent returns with very little outright market risk.
Shoji explained that View Capital creates unique opportunities for its clients through a specialised research team which investigates less obvious areas of investment which have better return risk profiles.
In the past, the firm has recommended investments in operating assets including: aircraft leasing, rail cars, shipping, cell towers, industrial cold storage, as well as litigation finance, music royalties, film finance, life settlements and catastrophe reinsurance.
The firm’s wealthiest clients use the endowment model and focus on private investments or alternatives. Shoji commented: “It could be as much as 40 or 50 per cent allocated to alternatives, including hedge funds, private equity, private real estate, and private credit.”
Shoji stated that his clients’ current main concerns are skewed valuations and overpaying for assets. He remembered how, during the Covid-19 pandemic, View Capital “held their clients’ hands” throughout this stressful financial period, and took advantage of opportunities which came up, while simultaneously protecting its clients’ capital.