Lazard launches Credit Alternative Fund

LONDON, 1 November 2021 - Lazard Asset Management (LAM) today announced an expansion of its alternative investment platform with the launch of the Lazard Coherence Credit Alternative Fund, a UCITS Fund managed according to the Lazard Coherence Long/Short Credit strategy. The Fund invests primarily in investment grade, crossover, and high-yield bonds in Europe and North America.

Managed by Sal Naro, Vincent Mistretta, Michael Cannon and Sanjay Aiyar, the Fund emphasizes consistent absolute returns and capital preservation, while seeking to limit interest rate volatility though hedging and other dynamic risk management.

Launched in 2012, the Coherence Long/Short Credit strategy actively identifies positions based on the philosophy that fixed income markets are an extension of equity markets, seeking an “early-mover” advantage by making investments ahead of yield spread and price changes driven by earnings and credit ratings momentum. Since inception*, the Coherence Long/ Short Credit Strategy has delivered an annualized return of approximately 8% net of fees with a realizable Sharpe Ratio in excess of 1.5, as of 30 September 2021.

“Persistently low interest rates have led to a surge in corporate debt issuance. Yet the changing economic environment and eventual withdrawal of central bank stimulus could lead to significant credit migration, causing challenges for investors that have moved down the ratings spectrum in search of yield,” said Sal Naro, Managing Director and Portfolio Manager on the Lazard Coherence Team. “By viewing bonds as an extension of equity markets, rather than adopting a traditional fixed income approach, we seek to identify sector and credit spread migration early, leading to greater return potential, while looking to limit the tail risk for investors.”

To assess potential investments, the team starts with a top-down macro view, which identifies relative value opportunities across and within sectors. A proprietary, multifactor model is then utilized to systematically identify potential long and short opportunities. Further due diligence by the team can leverage the research of Lazard’s global fundamental equity analysts. Allocations in the portfolio are grouped by their expected return drivers (e.g., core holding, event-driven, relative value) and are actively managed based on potential market opportunities and the macro landscape.

The Fund is available to investors in the UK and Ireland, Germany, Austria, and France. 

As of 30 September 2021, Lazard’s Alternative Investment Platform managed approximately
$3.9 billion in client assets.