The BlueBay Global Credit Alpha Long Short strategy aims to generate positive risk-adjusted returns by seeking to exploit dispersion, asymmetry, and volatility in the market.
Strategy overview
- The investment universe includes corporate and sovereign credit, interest rate markets, and derivative instruments, primarily in the investment grade space.
- Our rigorous, proprietary research of issuers and individual securities seeks inefficiencies in the market where we believe the market has mispriced risk/return, indicating potential for asymmetric return profiles. By accessing our full toolkit of instruments, we have the ability to implement a range of long and short positions.
- The strategy offers diversified and uncorrelated exposure in an environment of divergence in global rates and growth.
Our approach
Investment strategy
- A long-short discretionary credit strategy investing in the BlueBay Fixed Income Team's best ideas in liquid corporate and sovereign credit across global markets.
- The strategy seeks to perform in all market conditions and adopts a beta-neutral long/short investment strategy. It uses a combination of bottom-up investment ideas, macro thematic investments, and relative value trades.
- Targets a low correlation to credit, equity, and emerging and developed markets
- Permitted to take short positions in order to capitalize on negative market views or exercise relative value pairs trades.
- Invests in smaller deal size opportunities.
- Concentrated portfolio; average position size varies between 5-15% of portfolio and is held for 1-3 months.
- Very active and agile portfolio, with strong risk control framework.
- There is no natural bias to being long credit. Individual risk exposures are based on well-researched, medium-term structural investment decisions.
- The BlueBay Fixed Income Team believes that taking into account environmental, social, and governance (ESG) factors is an important aspect of the investment process. As such, ESG integration – the systematic review of material ESG investment risks – is applied across all of the team's strategies.1
Global investment grade expertise
- Benchmark aware but benchmark agnostic – alpha focus.
- Very experienced team/analysts with a long/short investment mindset.
- Strong focus on capital preservation.
- Tends to perform best in negative risk markets, when issuer performance dispersion is high.
- Extensive users of credit default swaps – both index and single name – to most efficiently implement investment ideas.
- Hedge fund skills and tools within a disciplined investment process.
1ESG integration does not apply to certain funds, investment strategies, asset classes, exposures or security types, including, but not limited to, money market, buy and maintain, passive, and certain third-party sub-advised funds/strategies or certain currency or derivative instruments. Where our investment teams do integrate ESG factors, the weight given to ESG factors in an investment decision depends on the investment team’s assessment of that ESG factor’s potential impact on the performance of the security and/or the fund. For funds where ESG factors are not part of the investment objective, ESG factors are generally unlikely to drive investment decisions on their own, and, in some cases, may not impact an investment decision at all.