Alma MidOcean Absolute Return Credit
Overview
Alma MidOcean Absolute Return Credit employs an absolute return long/short approach to investing in liquid high-yield bonds.
The fund’s management is delegated to MidOcean Partners.
Share Class
NAV
Cumulative Performance (%)
Fund Inception 13 January 2016
| Daily | Monthly | Ytd | 1Yr | 3Yr | 5Yr | Incept. | Incept.Date |
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The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance quoted. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
Strategy & Manager
Fund Strategy
The Strategy is designed to capitalise on structural and technical inefficiencies in the liquid credit markets, especially on the short-end of the credit curve. MidOcean deploys a systematic and repeatable credit investing process in low duration credit and relative value trading, paired with tactical hedging, which in combination produce high-yield-like returns with less volatility and more downside protection.
MidOcean typically constructs the portfolio with a net long bias and will seek to dynamically adjust the Fund’s net credit exposure and market exposure to optimise the portfolio’s risk profile given the prevailing market conditions.
Investment Manager
MidOcean Partners is a New York-based alternative asset manager established in 2003 that specializes in middle market private equity and alternative credit investments. MidOcean Credit started in 2009 and manages over $8 billion across a series of alternative credit strategies, collateralized loan obligations (“CLOs”), and customized separately managed accounts.
Key Persons
Ryan Dean
Portfolio Manager, Investment Committee
Ryan Dean is a Portfolio Manager of the MidOcean Absolute Credit Fund and for certain customised credit strategies. Mr. Dean is responsible for daily oversight of the portfolio and actively works with the research team to identify and evaluate absolute return and total return investment opportunities in performing credit situations. He is also a member of the Firm’s Investment Committee. He has covered several industries during his career including Automotive, Aerospace & Defense, Business Services, and Industrials. Mr. Dean has 13 years of experience in the financial services industry predominantly in fixed income credit research and trading. Prior to joining MidOcean Credit Partners in 2013, he was a research analyst in the High Yield Credit Research group at J.P. Morgan where he covered the Industrials and Services sectors. He also was a member of a research team that received #1 for the Services sector and #2 for the Industrials sector by Institutional Investor’s annual All-American High Yield Fixed-Income Research rankings. Mr. Dean received a B.S. in Finance from Lehigh University.
Michael Levitin,
Principal, Portfolio Manager
Michael Levitin is a Portfolio Manager of the MidOcean Absolute Credit Fund and for certain customised credit strategies. Michael is responsible for daily oversight of the portfolio and actively works with the research team to identify and evaluate absolute return and total return investment opportunities in performing credit situations. Prior to joining the firm in 2015, Mr. Levitin was an Associate in the investment bank at Bank of America Merrill Lynch, specializing in originating high yield bonds and loans. Previously, he was a Senior Analyst with MetLife’s distressed investments group.
Statistics & Commentary
Performance
The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance data quoted. The investment return and the principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Investment Manager's Commentary
as of 28/03/2024Fund
The Alma Platinum IV MidOcean ARC (the “Fund”) returned 0.74% in March, underperforming the BAML US High Yield Index (“The Index”) by approximately 45bps.
Throughout the month of March, despite a mid-month respite where investors absorbed potentially stickier than expected inflation, a resilient labor market, and weaker-than expected retail sales, risk assets continued their steady climb higher. Stocks once again outperformed credit while Treasuries and US Investment Grade (“IG”) bounced back to produce positive returns. For the third straight month, US High Yield (“HY”) and US Leveraged Loans (“LL”) produced positive results. For the first time in 2024, HY produced positive price return in the month (+0.65% in March, -0.24% in February, -0.51% in January), as spreads reached multi-year tights. With the favorable backdrop for defaults and primary markets remaining vibrant, CCCs returned 1.26% while the rally in rates helped buoy BBBs and BBs, which returned 1.29% and 1.26%, respectively. Bs lagged the rest of the cohort, returning 1.04% in the month.
The Fund remained active in the month of March, selling down certain short duration high yield positions that had reached their fair value while rotating into other longs. Positive performance during the month was mainly due to the Fund’s core high yield long book. Detractors during the month were the Fund’s short book, as well as the negative price action in a Telecommunications Company, a position we exited following the orthogonal shift in financial policy and posture from management. While a surprise, the loss associated with this position was manageable and we will look to deploy the capital into new situations with a cleaner path forward.
Looking ahead, we continue to find the hunting ground for off-market and short duration opportunities to be particularly compelling, but also remain cautious around reaching for generic risk. We continue to focus on patience and waiting for the eventual market sell-off to cover shorts and establish new attractive longs. We expect to continue our active management of the short book, staying nimble and rotating to the best use of capital throughout the year.
Facts & Documents
Facts
Fund Domicile: Luxembourg
Fund Type: UCITS SICAV
Fund Launch: 13 January 2016
Base Currency: USD
Depositary, Administrator, Transfert Agent: CACEIS Investor Services Bank S.A.
Dealing: Weekly with a 3-day notice
Cut-off time: 3 pm CET
Management Company: Alma Capital Investment Management
Countries where the fund is registered:
Luxembourg, Austria, Germany, France, UK, Italy, Switzerland, Ireland
Sustainability-related disclosures:
Environmental, social and governance (“ESG”) criteria have been integrated in the investment decision-making process. An ESG analysis is conducted for all issuers and a rating is given to each environmental, social or governance consideration relevant to the issuer. This is done prior to any investment, but also on an ongoing basis. Such analysis and rating will be integrated in the investment decision-making process. No index has been designated as a reference benchmark for this sub-fund. Further information can be found in the prospectus of the sub-fund. The extent to which the above-mentioned characteristics are met will be included in the annual report of the fund, as from the first report issued after 1 January 2022.
Identifiers:
I1C-U
ISIN: LU2382212186
Ticker: ALARI1C LX
Launch: 13 Jan 2016
I2C-E
ISIN: LU2382212269
Ticker: ALARCIA LX
Launch: 13 Jan 2016