Fixed-income specialist European Credit Management plans to launch a credit-default swap long/short fund due to increasing demand from institutional clients. The fund, which will launch in the next few months, is targeted at pension funds seeking absolute returns. "CDS can provide that by isolating the credit risk," explained Joseph Biernat, director of research in London.
CDS is still unknown territory for pension funds, but Biernat predicts the asset class will grow as institutional investors seek alternatives to conventional fixed income. Final details of the new fund have not yet been established, but Biernat said it will target returns of 1-2% over Libor.
