Absolute
Return Credit

Seeking positive returns irrespective of market conditions

Reasons to invest

Absolute return mandate

We aim to generate positive returns – and risk-adjusted alpha – regardless of market conditions.

Flexible

Our strategy is unconstrained, investing across geographies, currencies and instrument types, and we use long and short positions.

Defensive

We invest in a broad range of securities across markets, targeting low volatility and consistent returns.

Experienced team

A skilled, integrated team whose principal members have a strong record of implementing relative-value credit strategies since 2004.

ESG integration

Our investment process incorporates Federated Hermes’ best-in-class ESG integration and engagement insights.
Fraser Lundie

Investing worldwide, we aim to achieve strong absolute returns within global, liquid credit markets regardless of wider fixed-income conditions.

Fraser Lundie, CFA, Head of Fixed Income - Public Markets

Why Absolute Return Credit?

Investors are searching for income in a world with many highly valued, and even negative-yielding, assets. Approaching credit in the right way is more important than ever. We take a market-neutral approach to exploit differences in relative value between credit instruments. Our goal is to generate predictable positive returns regardless of the market’s direction. Since inception, the strategy has paid a consistent monthly distribution (past performance is not a reliable indicator of future performance).

We are unconstrained by benchmarks and invest across geographies, currencies and instrument types, including bonds, loans and derivatives. We seek exposure to attractive sources of credit quality and income in the US, Europe and emerging markets. This provides us with more opportunities to exploit differences in valuation and potential return. It also provides better access to liquidity. We invest long in bonds, credit default swaps and loans with favourable valuations, and take short positions in securities with poorer prospects.

Absolute Return Credit is a defensive investment strategy focused on generating consistent returns with low volatility. We offer market-neutral exposure with low idiosyncratic risk, targeting low annualised volatility – broad diversification is key to achieving this. The portfolio consists of 150-200 issuers, both long and short.

How we invest

Identifying sources of risk and opportunity
Disciplined bottom-up research
ESG integration and engagement

Investment Philosophy

We believe that global, relative-value investing throughout the capital structures of issuers can deliver strong returns through the market cycle.

Investment process

Absolute return credit infographic
Absolute return credit infographic

Team

6120, 6276, 6203
Fraser Lundie

Fraser Lundie, CFA

Head of Fixed Income – Public Markets, Federated Hermes Limited

Nachu Chockalingam

Nachu Chockalingam, CFA

Senior Credit Portfolio Manager, Federated Hermes Limited

Vincent Benguigui

Vincent Benguigui

Senior Credit Portfolio Manager, Federated Hermes Limited

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Product Information

For the latest performance and vital information – including prices, key facts, identifiers and ratings

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Insights

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Our Purpose

To deliver Sustainable Wealth Creation

Like all our investment capabilities, Federated Hermes Absolute Return Credit aims to deliver Sustainable Wealth Creation: the generation of wealth through investments that enrich investors, society and the environment over the long term.

Our business provides three equally powerful pathways to achieving this aim. Federated Hermes Absolute Return Credit features in the Active ESG route.

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Responsible, active investing for long-term performance.

Federated Hermes
Absolute Return Credit

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Thematic and values-based approaches for sustainable outcomes.

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Mission-led investment strategies to create positive impact.