Credit Hedge Fund Returns
Might be a stupid question, but wanted to ask what the return profile (targeted) looks like for credit hedge funds (especially those that use L/S, rel val strategies) generally?
Do they generally look to just beat a high yield index? Generate absolute returns of 8-10%? Sharpe of 2? I ask because I can't imagine that these firms can generate equity like returns unless they focus on pure distress
The best names in the space (Diameter and Apollo) seem to target / generate returns no higher than 15% (granted with great Sharpes) and yet are still applauded for their performance. See the following: https://www.bloomberg.com/news/articles/2021-09-2… and https://www.apollo.com/~/media/Files/A/Apollo-V3/….
Meanwhile the best L/S equity, event-driven funds generate +20% annualized returns and don't seem to receive as much press
Bump
There’s not really many (any?) equity funds doing 20% either, and if they do it’s with really high volatility which institutional investors don’t really like
OP here. Fair point on the volatility.
Guess my question is then, would a L/S credit fund be able to generate similar returns to equity? Or, do they target a similar return?
https://www.cliffwater.com/Research/DownloadFile?path=docs%2FHedge%20Fu…
See page 8 for 5 year annualized returns and Sharpe for most of the relevant credit HFs
Fantastic report - exactly the kind of resource I've been looking for!
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