Stephanie Baxter finds there are concerns over how the performance multi-credit strategies is measured
“Multi-credit is the new buzz word for asset managers and consultants. They say these strategies help protect against future interest rate rises and still produce yield as the credit cycle comes to an end.., however strategies are typically benchmarked by a basic cash-like or Libor index, or more commonly cash plus 1%, 2%, 5% and so on..”
Clerus managing partner and co-founder Henrik Pedersen believes the use of cash-like benchmarks should be of concern to trustees as they do not reflect the risk in multi-credit: “Cash plus 3% seems very innocent but you’re potentially buying a time bomb.
He also argues that increasing the cash plus benchmark “doesn’t mean anything all” as it doesn’t show whether the manager has done well over a long period”
To read the full article from Professional Pensions please click here: http://www.professionalpensions.com/professional-pensions/news/2380200/is-there-a-problem-with-benchmarking-multi-credit