GAM launches market neutral credit Newcits fund

GAM has added another fund to its growing Newcits range with the launch its first market neutral credit fund with credit manager DCI.

The GAM Star Diversified Market Neutral Credit is a Ucits III fund which will aim to produce absolute returns with low correlation to fixed income markets.

By investing in a highly diversified long and short portfolio of mispriced and predominately investment grade credit it also aims to created low volatility within its portfolio and minimise its sensitivity to aggregate credit market moves

The San Francisco-based asset management firm DCI claims to use leading-edge quantitative systems to determine corporate default probabilities and to accurately value corporate credit instruments. It then constructs carefully risk-matched and diversified long and short portfolios to exploit the revealed mispricings.

The US firm's managing partner and CIO, Stephen Kealhofer, which manages over $3.5 billion of credit long short and net long corporate credit strategies, believes the system is useful as there is different information in equity and credit prices.

‘We capture and interpret an extremely broad set of information from both equity and credit markets so that we can determine credit risks accurately and frequently,’ said Kealhofer. ‘We use this information to identify and exploit mispricings in the market.’

Among GAM's other Newcits offerings are the GAM Star Keynes Quantitative Strategies fund, a systematic macro Newcits fund managed by former Goldman Sachs global equity strategist Dr Sushil Wadhwani, and the GAM Star Global Rates.