Kempen launches structured credit fund
Kempen Capital Management has introduced a structured credit pooled fund that enables investors to “easily and cost effectively” access the structured credit market.
In a statement, it said that its Diversified Structured Credit Pool (DSCP) comprised long-only structured credit funds selected by Kempen and managed by “best-in-class specialists” Golden Tree, LibreMax, and One William Street – all US-based managers.
The DSCP is to target senior secured credit, student loans, and residential and commercial mortgages, Kempen said. The emphasis would be on collateralised loan obligations (CLOs) with an investment grade rating of BBB or above, although the group said there would be a mix of investment grade and sub-investment grade bonds.
According to Kempen, the DSCP has a net target return of between 4% and 6% in US dollars and unhedged.
It indicated that the asset managers would receive a fixed fee of 0.6%, while Kempen would charge 0.35%.
The asset manager added that the interest rate duration was expected to be two to three years, and that at least 80% of the fund would be allocated to the US with the remainder targeting Europe.
Kempen has been investing in structured credit managers since 2009, as part of its flagship fund-of-hedge-funds Kempen Orange Investment Partnership.
Remko van der Erf, Kempen’s co-head of hedge fund solutions, said that risk exposure and liquidity of the DSCP were between funds for investment grade credit and funds focusing on direct loans and infrastructure.
“Whereas investors in direct loans are stuck to their investment for years, investors in the DSCP can divest on a quarterly basis,” he said.
Van der Erf said that structured credit was one of the largest fixed income credit markets globally, but that it had been overlooked by many investors “because of its complexity, lower liquidity, and unfavourable capital charges for insurers and banks”.
“While it is a more complex asset class, it provides higher spreads than similarly rated corporate bonds as well as protection against rising rates and exposure to the consumer market,” he said. “By working with the right partner who can assist navigating the market, investors can access a niche alternative to high yield.”
The structured credit pool will be available to professional investors in the UK, the Netherlands, Belgium, Denmark, Germany, Finland, France, Italy, Luxembourg, Spain, and Sweden.