CIFC launches long/short high-yield UCITS fund for veteran Horowitz
Ex-Muzinich & Co management team
Alternative credit specialist asset manager CIFC has launched a long/short high-yield UCITS fund to be managed by ex-Muzinich & Co veteran Jason Horowitz.
Horowitz, who joined New York-based CIFC in January as head of US high yield bond investments, will run the CIFC Long/Short High Yield strategy, which will be a sub-fund of the Dublin-domiciled CIFC Credit fund ICAV.
The fund will mirror a strategy already run by Horowitz for CIFC in the US since 1 February, which has delivered a 12.7% net gain since inception, compared to a 0.2% loss from the wider US high-yield market.
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The fund aims to deliver high single-digit returns for investors, while protecting capital in down markets, CIFC said.
CIFC's London-based managing director Josh Hughes said this was "the right time for a strategy like this, which has shown over the long term that it can deliver attractive returns in all weathers".
"Jason has 25 years' investment experience and is supported by CIFC's strong credit research team," Hughes continued.
"By launching the strategy within a UCITS fund structure we can open it up to a wider audience, including wealth managers and private banks, as well as European-based pension funds, family offices and other investors."
Horowitz, who worked at Muzinich for 13 years before joining Millennium Management, brought colleagues Brandon Hole and Eric Seiden to CIFC with him. The trio had previously run a long-short corporate credit hedge fund.
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Horowitz claimed the high-yield market was "well-suited for a long/short strategy". That is "because there are lots of market inefficiencies that create opportunities in either direction for those with the research capacity and technical expertise".
CIFC has a 47-strong investment team, with 20 analysts who will all bring ideas to this strategy, the manager explained.
CEO and CIO at CIFC Steve Vaccaro said the trio had "a vast amount of expertise and experience in the high yield market".
"When you add this to CIFC's existing deep bench of corporate credit research analysts, it makes for a compelling proposition. This fund demonstrates our commitment to continuing to expand the range and flexibility of our investment solutions for investors around the world."
CIFC said the strategy will seek to capture returns from four areas: identifying long/short opportunities through fundamental credit research; exploiting long and short technical opportunities and inefficiencies in different segments of the high yield market; investing in dependable credit from short-dated bonds with low-volatility characteristics; and arbitrage.
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On the strategy, Horowitz explained: "We regularly stress-test the impact of possible macro events on industries and companies to understand where the risks lie and how we might mitigate them.
"We have a strict sell discipline for when our thesis changes or the outlook changes. And, of course, the ability to short means where we see particular risk, we have the opportunity to turn it to our investors' advantage.
"We do not look to generate our entire year's return on one or two trades - we seek to maintain a diversified portfolio by credit and sector and closely monitor liquidity risk to the individual positions and portfolio overall.
"We focus on beta-adjusted portfolio-level net exposure, average rating, duration and yield as opposed to using a black box approach that may break down during periods of heightened volatility. We think that this gives us a good feel for what our risk is at any given time.
"The Covid-19 pandemic is unparalleled, but we have experienced tough markets before, and though nothing is ever guaranteed, we can see lots of opportunities to protect the portfolio and generate strong returns."
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