Investing worldwide, we exploit differences in relative value throughout issuers’ capital structures aiming to outperform through the cycle.
A global approach to exploit the globalisation of the global high yield credit market.
By searching the capital structures of issuers for securities, we seek bonds and derivatives with superior relative value.
Identifying outperforming securities is more important than picking issuers that simply pay back.
A skilled, integrated team whose principal members have worked together since 2004.
Take a look at the portfolio from five angles to see what makes it different to its peers and why the asset class may be of appeal to investors, both in the short and long-term.
We believe that global, relative-value investing throughout the capital structures of issuers can deliver strong returns through the cycle.
Through top-down analysis, we determine our risk appetite and the return prospects of different regions and sectors. These findings direct our disciplined, bottom-up research, in which we seek exposure to issuers with attractive credit risks and aim to determine which securities in their capital structures provide superior relative value.
Our global approach, in which we invest throughout the US, Europe and the emerging markets, provides us with access to an expansive set of opportunities and sources of liquidity.
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. By investing worldwide, we are exposed to more opportunities to exploit differences in valuation and potential return, and can better manage liquidity risk. Our top-down analysis assesses the return prospects of different regions and sectors, and informs our bottom-up research of companies. We aim to identify attractive issuers and, crucially, determine which bonds and credit-default swaps in their capital structures provide superior relative value.
We historically assessed companies’ environmental, social and governance (ESG) risk alongside core operating and financial risks. Now we are furthering this analysis by using a proprietary pricing model to capture the influence of ESG factors on credit spreads. It shows the correlations between an issuer’s QESG Score – developed using best-of breed external research and insights from the engagement specialists in EOS – and their credit-default-swap spread. This enables us to calculate the marginal price of the ESG risk for each issuer, and anticipate changes in valuation. It is an informative analytical tool, enabling us to avoid issuers with tight spreads and low QESG Scores and favour those with wide spreads and high QESG Scores.
To celebrate the 10-year anniversary of the Hermes Global High Yield Credit Fund, Fraser Lundie, Head of Credit, takes a look at how the debt market has evolved over the last decade, how this has influenced the fund’s process and what part ESG considerations have to play.
Fraser Lundie
CFA, Head of Hermes Credit and Lead Portfolio Manager
Fraser Lundie
CFA, Head of Hermes Credit and Lead Portfolio Manager
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Fraser joined the international business of Federated Hermes in February 2010 and is Head of Credit and lead manager on the range of credit strategies. Prior to this, he was at Fortis Investments, where he was responsible for European high yield credit. Fraser graduated from the University of Aberdeen with an MA (Hons) in Economics; he earned an MSc in Investment Analysis from the University of Stirling and is a CFA charterholder. In 2017, Fraser joined the board of CFA UK, a member society of the CFA Institute. He was featured in the Financial News’ ‘40 Under 40 Rising Stars of Asset Management’, an editorial selection of the brightest up-and-coming men and women in the industry, and in 2015 Fraser was named as one of the top 10 star fund managers of tomorrow by the Daily Telegraph. In 2016, Citywire Americas named Fraser number one in their global high yield manager review, and InvestmentEurope and Investment Week both named the Federated Hermes Multi-Strategy Credit Fund top global bond fund at their respective 2017 Fund Manager of the Year Awards.
Andrey Kuznetsov
CFA, Senior Portfolio Manager
Andrey Kuznetsov
CFA, Senior Portfolio Manager
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Andrey joined the international business of Federated Hermes in January 2013 and is co-portfolio manager on the range of credit strategies. He joined from C-Quadrat Asset Management, where he managed the multi-strategy credit fund and generated investment ideas for a range of absolute return credit funds. Andrey holds an undergraduate degree in Economics from State University – Higher School of Economics in Moscow, where he majored in Financial Engineering and Mandarin Chinese, and a graduate degree from London Business School. Prior to moving to London he worked in various roles in Russia and China. In 2019, Andrey was named in the Financial News’ ‘Top 25 Rising Stars under 40 in European Asset Management’ and has been selected to join the leadership team of Next Generation Fixed Income Portfolio Managers network, a CFA UK initiative to bring together the leading portfolio managers in the UK. Andrey is a native Russian speaker and CFA charterholder.
Nachu Chockalingam
CFA, Senior Emerging Market Debt Portfolio Manager
Nachu Chockalingam
CFA, Senior Emerging Market Debt Portfolio Manager
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Nachu joined the international business of Federated Hermes in March 2018 as a portfolio manager responsible for emerging market debt. She joined from Ontario Teachers’ Pension Plan, where she was a portfolio manager responsible for the plan’s active investments in emerging markets and European credit. Nachu started her career at JPMorgan in London as a sell-side analyst covering, firstly, European high yield and investment grade and then CEEMEA credit and was at the bank in London for 13 years. Nachu graduated from the London School of Economics with a degree in Economics and is a CFA charterholder.
Vincent Benguigui
Portfolio Manager
Vincent Benguigui
Portfolio Manager
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Vincent joined the international business of Federated Hermes in 2013 and is portfolio manager responsible for short duration strategies and global risk management for the credit portfolios. He also oversees the implementation of non-linear trading strategies, with extensive use of derivatives products such as credit options and indices. He joined from Scor Global Investments in Paris, where we was credit analyst across European high yield. Vincent holds a Master’s degree in Banking and Finance with Honours from Pantheon-Assas University in Paris, as well as a Bachelor in Management from Dauphine University in Paris.