Synthetic Credit

Strategy focus

High-Yield bond market has proven to be an attractive asset class to equities by offering similar returns with a lower volatility. They typically offer higher coupons than government bonds or investment grade corporate bonds but are also coupled with specific risks. High yield bonds are more volatile and embeds a higher default risk. In times of economic stress, defaults may spike and liquidity dries up, making the asset class more sensitive to the economic outlook.

LFIS Credit is an innovative investment strategy that provides liquid exposure to European High-Yield Credit return potential with a significantly reduced default risk and limited interest-rate risk.

In addition to this, the strategy also aims at outperforming High-Yield bond market over the long term and during crises.

The long credit exposure is implemented in a differentiated manner using synthetic credit instruments and benefits from attractive risk-adjusted returns, high liquidity, and a broad diversification.

Our approach of high yield investing also allows us to isolate credit exposure from interest-rate exposure making the strategy mostly immune to interest rate fluctuations.