BETA > Alternative To High Yield

Synthetic Credit

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Strategy focus

LFIS “Credit” strategy strive to generate attractive returns by employing a synthetic long credit positioning on capital markets.

This differentiating implementation through the use of synthetic instruments allows investment on the credit asset class without being exposed to the risks associated compared to a traditional bond fund/ETF.

Our investment process aims at reducing the below associated risk of the credit asset class : 

  • Duration risk: synthetic credit allows segregation of credit and interest rate exposure
  • Default risk: investment through specific seniorities of synthetic credit indexes allows to frame default risks
  • Idiosyncratic risk: exposure usually taken through an index, more diversified than a discretionary bond strategy

… While generating a better carry:  Synthetic credit tends to outperform cash strategies thanks to a better carry rolldown over the 3y/5y range. Also, by using highly liquid and standardized instruments we offer to investors superior liquidity during stressed environments.

Through rigorous due diligence of synthetic credit instruments, we believe that we can construct solid portfolios that can outperform broad traditional fixed income asset class over a full credit cycle.

Michael Hattab

"At LFIS we benefit in the Credit Team from a rare expertise in synthetic credit instruments, a solid background in investment banking, and a robust network of credit oriented counterparts."

Michael Hattab

Portfolio Manager @ LFIS