London CIV launches alternative credit fund

The sub-fund launched in February with three seed investors and an initial £398mn in assets. 

CQS has been appointed as the manager and the sub-fund will be invested in its Credit Multi-Asset Fund. Investment assets include securitised assets, loans, high-yield corporate bonds, convertible bonds, investment-grade corporate bonds and government bonds. 

The sub-fund will get exposure to these assets either indirectly or directly. The objective is to seek a return of the Sterling Overnight Index Average plus 4.5 per cent, net of fees. 

The manager aims to deliver stable returns while optimising yield within the sub-investment-grade credit market.

There is a focus within the sub-investment-grade market on floating interest rate credit instruments within the senior secured loans market and asset-backed securities, which are expected to result in lower interest rate sensitivity for the overall portfolio.

The pool has been working closely with CQS to improve its environmental, social and governance processes, which has led to the underlying CQS strategy being classified as Article 8 under the Sustainable Financial Disclosure Regulation, which means it promotes ESG characteristics. 

Mike O’Donnell, chief executive of London CIV, commented: “I am very pleased we have launched the Alternative Credit Fund as it will play a part in meeting our own ambitious net zero targets, and those of the investors in this sub-fund.”

CQS has also become a signatory to the Net Zero Asset Managers Initiative and it is in the process of setting interim targets to achieve net zero by 2050.

O’Donnell said this sub-fund will support London CIV’s duty as investors to finance the low-carbon transition.

“Reducing climate change risk is a key priority for client funds, many of whom have already set their own net zero targets, and this sub-fund will support them in delivering these objectives,” he said.

This article originally appeared on MandateWire.com