Threadneedle has launched a new credit opportunities fund, to be managed by Barrie Whitman, the UK asset manager’s head of high yield.  Fund managers Roman Gaiser and Alasdair Ross comprise Mr Whitman’s team. The fund is currently authorised for distribution in the UK and will be registered in the coming months for distribution in Europe.

With this new addition to its absolute return strategies range the firm aims to leverage its credit expertise to complement the existing suite of absolute return products, aiming for a similar level of performance: a 1 month Euro deposit rate plus 350 basis points, gross of charges and tax, per annum over the medium term. 

The UCITS III regulated fund will focus on opportunities within the high yield and investment grade markets, but Mr Whitman and his team also aim to exploit opportunities that arise within other areas of the credit market.

Investments will be made in a wide range of credit instruments, including corporate bonds and derivative contracts.

"The current weak economic environment and the high degree of risk aversion prevalent across financial markets have created a wealth of opportunities.  We are able to add value via both traditional and alternative means, or more specifically via both long and short positions in the credit markets.  Whilst we expect the market to be subject to ongoing volatility in the near term, there can be no denying that valuations appear cheap and the opportunities to add value are plentiful," Mr Whitman said in a statement.

He believes the offering will attract investors who seek potential for positive medium term returns.  He says the multiple sources of alpha incorporated within the fund, coupled with its usage of long and short investing, mean returns are likely to create a low correlation to traditional fixed income portfolios and other asset classes.

"The fund should prove to be a useful diversification tool, allowing investors to reduce overall portfolio risk. With a similar performance target but different sources of alpha compared to Threadneedle’s other absolute return funds, the credit opportunities fund could also potentially be used in conjunction with our existing products to diversify risk further in a broader absolute return portfolio, Mr Whitman said.

Threadneedle, which is the international investment platform and subsidiary for US financial services company Ameriprise Financial, managed £47 billion ($68.2 billion) in assets as at 30 November 2008.

 Along with a staff of 130 based in London, the firm has a presence in 16 countries and employs 600 staff internationally.