American credit specialist CIFC launched a UCITS fund as it builds its presence in Europe.
The CIFC Global Floating Rate Credit Fund opens up access to the firm’s structured credit expertise for the first time in a UCITS format. It will invest in some of the more liquid tranches of collateralized loan obligation (CLO) bonds, investing at least half of its funds in BBB-rated bonds.
Managed by structured credit veteran Jay Huang and domiciled in Dublin, Ireland, the fund launched with commitments of over £50 million
($65.8 million) and is targeting a return of 7-8% pa. It is the first fund launched in Europe by CIFC since the firm opened its office in London in 2018.
European Managing Director Joshua Hughes commented, “We believe many European investors, as well as those further afield in Asia, favor or require the liquidity and regulatory oversight that the UCITS regime brings, so we’re pleased to have been able to create the fund within this structure.”
He added, “This fund will enable discretionary wealth managers, funds of funds managers and family offices to access the enhanced returns that the CLO market offers but without the liquidity and diversification challenges that direct investments in CLOs would entail. The fund will be diversified across 50 to 100 CLOs and actively managed, which adds an additional layer of risk management.”
At inception, the CIFC Global Floating Rate Credit Fund will hold around 70% of its assets in CLOs managed in the U.S. and 30% in Europe.
“The asset allocation will change depending on market conditions – we will have the flexibility to invest in the best opportunities in the US and Europe,” said Huang. “The CLOs are investing in the senior debt of major corporations, including household names like Dell and Dunkin’ Donuts. The debt is secured and we’re also monitoring underlying company performance closely. We’re investing on a long-only basis, so it’s a useful way for portfolio managers to add diversification and compelling relative returns to portfolios.”
The fund is USD denominated, with hedged currency share classes in sterling, yen and euros. It is also open to U.S. investors.
Founded in 2005 and headquartered in New York, CIFC specializes in U.S.-corporate and structured credit strategies and is one of the largest managers of senior secured corporate credit.