Fortune Asset Management has introduced Muzinich & Co's Hedgeyield fund through its Emerging Manager Program, which helps new hedge fund managers raise the initial capital to start running their funds.
Muzinich & Co's Hedgeyield fund is a high yield corporate bond hedge fund that aims to exploit price differences in high yield corporate bonds, mainly in the US. It will use leverage and arbitrage strategies and will invest in bonds rated BBB and above. The fund will aim to produce a target return of 15 per cent a year.
John Ingallinera, who has over 18 years' experience of hedging corporate bonds, will manage Hedgeyield. He previously worked for Lehman Brothers, Kidder, Citibank and Saloman Brothers.
Ingallinera may take long and short positions within a single company, within one industry and across industrial sectors. He may also take short positions in high-yield companies with flawed business strategies.
As part of the risk control process, the fund will hold no more than 12 per cent in any one industry and no more than 2 per cent in a single company. Stock prices are monitored daily and Ingallinera will look at how volatile each stock has been in the past. He will also bear in mind the likely impact of factors such as changes to interest rates when deciding whether to go long or short a stock.
The CSFB/Tremont Fixed Income Arbitrage index rose by 1.26 per cent in January 2003, indicating that this type of strategy is performing relatively well in current market conditions. According to the CSFB/Tremont indices, managed futures is the best performing strategy, but it is high risk.
Like the recently established Henderson global fixed-income absolute return fund, this complicated fund is likely to be of interest only to professional investors and institutions who can meet the minimum investment of $1m.