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Hermes Credit

Home / Credit Capabilities

Investing across the credit spectrum, we offer liquid and illiquid absolute and relative-return strategies to meet investors' diverse yield needs.

"Superior risk-adjusted returns from credit markets are best achieved through a
global, unconstrained approach. This enables us to search corporate capital
structures to  identify instruments offering the most attractive return prospects
and liquidity."

Fraser Lundie & Mitch Reznick

Co-Heads of Hermes Credit

Why Hermes Credit?
We believe that global, relative-value investing throughout the capital structures of issuers can deliver strong returns through the cycle. This requires a broad mandate.  We seek exposure to attractive sources of credit quality, income and inflation in the US, Europe and the emerging markets. This presents a greater range of credit securities, providing more opportunities to exploit differences in valuation and potential return. It also enables the team to avoid chronically overvalued sectors and access better liquidity.

We have a skilled team focused on security selection through capital structure, and able to price the impact of ESG on credit instruments.

People People

  • Skilled, integrated team whose principal members have worked together since 2004
Process Process

  • High-conviction credit selection and defensive trades, guided by top-down analysis
  • ESG considerations integrated into credit selection
  • Fundamental analysis identifies optimal issuer and security selection
Performance Performance

  • A track record of outperformance through market cycles
Alignment Alignment

  • Invested alongside client
  • Remuneration linked to delivery of clients’ objective
  • Investment Office oversight acting in clients’ interest
  • Capacity closely managed
Edge Edge

  • Relative-value investing across the capital structures of issuers worldwide
  • Active management through up and down markets
  • Macro, technical and company-specific risk analysis

Investment Process
We seek relative value throughout the capital structures of issuers worldwide. One process across four strategies.

Through top-down analysis, we determine risk appetite and the return prospects of different regions and sectors. These findings direct the team’s disciplined, bottom-up research: identifying issuers with attractive credit risks and, crucially, determining which securities in their capital structures provide superior relative value. Exploiting such opportunities is core to Hermes Credit’s approach.

 

We focus on

  • Macro risks that drive returns
  • Capturing valuation anomalies arising from globalising markets
  • Relative value across the capital structure
  • Securities, not just issuers
  • Defensive trades that protect returns

Day in, day out 

  • Principal team members have together generated impressive credit track records since 2004

ESG analysis: Integrated into investment decisions
We believe that in order to give it the best chance possible to deliver superior risk-adjusted returns for our clients, we must integrate the analysis and pricing of ESG risks to our investment process. We know from our own proprietary research that credit risk is the primary driver of credit spreads. However, poor ESG behaviours can lead to weaknesses in a company’s operating and/or financial strength that, by extension, can lead to an increase in credit risk. Therefore, we analyse ESG risks in addition to the more traditional operating and financial risks.

0003338 Credit Capabilities Triangle Static

Hermes Credit

Global High Yield Credit
  Multi Strategy Credit   Absolute Return Credit
160px Global High Yield   160px Credit Multi Strat   160px Absolute Return Credit
Global Investment Grade Credit        
160px Investment Grade        

Past performance is not a reliable indicator of future results.

The value of investments and income from them may go down as well as up, and you may not get back the original amount invested.

When considering an investment you should ensure that you read the offering documents before investing which will include a comprehensive list of the risks associated with the product. It should be noted that any investments overseas may be affected by currency exchange rates. Where the strategy invests in debt instruments (such as bonds) there is a risk that the entity who issues the contract will not be able to repay the debt or to pay the interest on the debt. If this happens then the value of the strategy may vary sharply in value or result in loss. The strategy makes extensive use of Financial Derivative Instruments (FDIs), the value of which depends on the performance of an underlying asset. Small changes in the price of that asset may cause larger changes in the value of the FDIs, increasing either potential gain or loss. Past performance is not a reliable indicator of future results and targets are not guaranteed.

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