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.


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


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’ 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. Whilst this is not guaranteed, our goal is to generate predictable positive returns regardless of the market’s direction.

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


1639, 1559, 1601
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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