What's New In Investments, Funds? – NextBold Capital, BNY, Insight

Editorial Staff

20 September 2024

NextBold Capital
; it seeks to exploit market structural inefficiencies and relative value mispricing opportunities, as well as enhance liquidity through “credit portfolio trading,” a more liquid alternative to traditional over-the-counter (OTC) trading. The fund is designed to deliver a return above its benchmark: The Bloomberg Barclays US HY Fallen Angel 3 per cent Cap Total Return Index Value Unhedged.

“The fund seeks to take advantage of the technical dislocation that occurs when bonds are downgraded from investment grade (IG) to sub-investment grade, which can cause passive and active investment grade investors to become 'forced sellers' of fallen angel bonds,” Paul Benson, head of systematic fixed income at Insight, said. “Opportunities are created during these periods of high downgrade activity because spreads often widen disproportionately during the month of the downgrade relative to peers and to fair value.”

The weakening economic backdrop suggests we may soon approach a sweet spot for fallen angels, with potential for $30 billion to $50 billion of new fallen angels over the next 12 months as the economy moderates,” Benson added.