FundFire | Hedge Funds See Credit Opening as Investors Go Tactical

Credit hedge fund strategies entered the year with flows up, institutional investors expanding commitments, and the backdrop of a crowded private debt arena that could push more investors toward shorter-duration strategies, industry watchers say.

Credit hedge funds saw nearly $5.5 billion in inflows in January, with the segment turning around in 2017 after having experienced months of on and off returns going back to 2015, according to eVestment. Directional credit strategies were responsible for $3.62 billion of the total inflows last month…

…“There still is a fair amount of consensus over credit spreads being pretty tight,” says Trey Parker, co-CIO at Highland Capital Management. “Given the increasing dispersion we’ve seen in certain sectors in the credit space, given relatively frothy valuations in equity markets, folks are still making allocations to alternative credit as an asset class.”…

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Ruozhou Wang