Deutsche Bank is marketing globally two constant proportion portfolio insurance-wrapped credit funds. The deals, managed by D.B. Zwirn, a multi-billion dollar New York-based hedge fund, and by Schroder Asset Management, come on the heels of Deutsche Bank's first managed CPPI-wrapped fund last month with AIG SP, and a dramatic pickup in credit CPPI structures across Europe and Asia on mounting investor concern about a downturn in the credit cycle (DW, 9/1).
The deals are different in focus but similar in structure. The AIG fund, which raised EUR200 million when it first priced last month in Europe, focuses on single names, using a long/short strategy. It is now being marketed in the Middle East and Asia. The D.B. Zwirn fund will play on the relative value of single names, indices and bespoke collateralized debt obligation tranches. And the Schroder fund will invest in the investment grade and crossover credit market, using single-name credit-default swaps and the iTraxx and CDX.XO indices.
"Investors don't want to go outright long credit in this environment," said an official close to the deal. "The credit cycle will deteriorate, but no one knows when. So it's important to have strategies that allow the manager to go long, short or market neutral when the market does widen."
Jamie Stuttard, sterling corporate bond fund manager at Schroder in London, did not immediately return a phone call, and Alissa Grad, director of marketing at D.B. Zwirn in New York, declined all comment.