Launched last week, the fund will be managed by City’s John Sullivan and his team, focused on performing, stressed and distressed European credit.
The fund, designed and created for Psigma clients, has been seeded with £35m.
Psigma chief investment officer Tom Becket said the current dislocations seen in European markets allowed for a ‘once in a lifetime’ investment opportunity which he believes could lead to the fund returning 8% annual yield when fully invested.
Sullivan said he expected that dislocation to continue, and was looking forward to taking advantage of an opportunity set that had grown tenfold over the last decade.
Psigma IM’s head of fixed interest James Knowles explained the concentrated approach: “Unlike the behemoth funds that typically hold hundreds of different bonds and issuers, the fund will be composed of a concentrated list of 25 to 35 intensely researched issues, although these will be diversified by sectors and industries.”
He said the Psigma view was that the current economic environment combined with changes to company funding – as banks were deleveraging – would lead to more opportunities in both the primary and secondary markets.
“This background is also likely to increase the number of ‘events’ such as restructurings, M&A, refinancings, IPOs and tenders which trigger accelerated returns for bond holders as companies try to maximise returns in low growth conditions,” Knowles added.
