SYZ Asset Management has launched a new CHF credit bond strategy, Citywire Switzerland can reveal.
The new fund was introduced in response to the increasing demand for Swiss franc denominated fixed income.
The strategy will be managed by the fixed income team headed by Daniel Hannemann.
The strategy taps credit opportunities across the Swiss corporate bond universe and has to invest at least two thirds of the fund into debt securities denominated in Swiss franc and listed on the Swiss stock exchange, SIX.
The investment pool includes convertible bonds, warrants and mandatory convertible bonds. One third of the fund can be invested outside of the SIX investment grade universe, however securities have to have at least B3 and B- rating and be denominated in Swiss franc.
When it comes to the investment grade part of the portfolio the team uses an indexation strategy based on stratified sampling, which means portfolio managers use factor instead of quant models in fundamental credit analysis during the bond issues selection.
The team implements an active approach when picking credits outside the ex-investment grade index stocks (AAA-BBB). The fund managers are supported by credit research from Swiss firm Independent Credit View AG (I-CV), which has 17 analysts on the team.
During the selection process the portfolio managers will assess on and off-balance sheet risks and question assumptions of rating agencies.
The team will outsource transaction processing and other operational functions to focus on asset management.
Hannemann said the fund does not take directional risk via duration, while reduced rate sensitivity will be achieved by taking appropriate credit risk in anticipation of higher earnings forecasts.
Commenting on the launch of the fund, the head of fixed income at the firm said:
‘The fund possesses a number of satellite qualities, including providing an alternative to foreign currency bonds and exposure to sub-investment grade opportunities which creates a better relative return profile than higher liquidity propositions.’