Aeon Investments: High market volatility presents opportunities for credit investors

Aeon Investments: High market volatility presents opportunities for credit investors

14 maart 2024

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Nearly all institutional investors agree that during the current market volatility, active fixed income fund managers can add value to portfolios.

New global research (1) from Aeon Investments, the London-based credit-focused investment company, with pension funds, insurance asset managers, family offices and wealth managers who collectively manage around $544billion, finds that one-quarter strongly agree and 74% slightly agree that fund managers can increasingly add value through sector rotation to exploit valuation anomalies/mispricing or market catalysts for short-term returns.

The majority of respondents expect these opportunities to increase over the next two years, with 22% saying there will be dramatic increases and 59% predicting slight increases in the chance to add value. Nineteen per cent of investors say the situation will remain the same over the next two years.

Investors also believe there are a growing number of opportunities in the credit/fixed income market based on the highest conviction ideas, contrarian themes and dislocation opportunities. Fourteen per cent say these opportunities will increase dramatically over the next three years and 73% say they will increase slightly.

Thirteen per cent of respondents say they will stay the same.

Khalid Khan, Head of Portfolio Management, Aeon Investments said: 'Active fixed income managers clearly have an opportunity to add value in current markets. It is encouraging to see how many investors recognise the potential from active fixed income investing, which Aeon has long promoted, as a means to boost alpha and manage risk.'

Aeon Investments is focused on delivering long-term superior risk-adjusted returns, through stand-alone investments that provide its investors’ access to key economic sectors. This is achieved by minimising downside risks to ensure capital preservation, and by designing a structure which prioritises alignment of interests.

It employs a research-driven investment approach and uses a combination of qualitative and quantitative techniques. Idea generation and its due diligence process are based on a top-down approach, considering economic, credit and industry cycles, to identify inefficient markets and pricing dislocations.

At the portfolio level, Aeon Investments utilises a bottom-up approach, employing a rigorous due diligence process to assess the intrinsic value of the underlying collateral or credit, manage risk, and maximise return potential for investors.

This structural, statistical, and fundamental approach gives us a deep understanding of risk, which allows Aeon Investments to mitigate and structure for idiosyncratic and systemic risk during portfolio construction, and for the duration of the investment.

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