Muzinich to launch global credit fund

US specialist credit boutique Muzinich is planning to bring a low volatility global tactical credit strategy to European and UK investors within the next few weeks.

The fund, Muzinich Credit Opportunities, was launched for veteran credit manager Mike McEachern at the start of the year, and is currently only available to US investors.

However, the manager told Citywire Global that the group was in the process of creating a Ucits structure for the fund to allow it to be marketed in Europe.

The 'go anywhere' fund can invest in global investment grade and high yield corporate bonds as well as bank loans.

McEachern told Citywire Global: 'Spreads in credit are at their historical average but overall, corporate credit is in its best shape for generations.'

Fund strategy

McEachern said the fund's assets were currently split one third in short duration US high yield, one third in US bank loans and 25% in US event-driven high yield. Around 10% of the fund is in European high yield.

'The benchmark for the fund would be Libor plus 5-7% over a normal credit cycle but with around two thirds of the volatility,' he said.

McEachern said he was avoiding interest rate sensitive securities and currently held no treasuries.  The 'special situations' event-driven credit positions were centred around the US energy sector where the shale gas revolution had exposed clear winners and losers in the sector, as well as to corporate  M&A activity.

In US high yield, McEachern said the fund held a diversified portfolio which was currently overweight conservative sectors like telcos, healthcare and energy.

He added: 'In European high yield we still see credit positive events because it is such a tough environment so companies are staying conservative. Most of our exposure is in the peripheral region.'

McEachern has been running credit strategies since 1984 but joined the New York-based boutique at the start of 2012 from SEIX advisers.

Muzinich runs around $22 billion across its credit strategies and is seeing interest from European fund buyers for some of its funds including the Muzinich Short Duration High Yield  fund run by David Bowen, which featured prominently in Citywire Global magazine's October 2012 Buyers' Market feature.