RWC Partners has launched the RWC Diversified Return fund after the appointment of the senior members of multi-strategy specialists Agilis Investment Management LLP.
The diversified returns team led by Clark Fenton, along with colleagues Charles Crowson and Praveen Kanakamedala, has a distinct investment approach which aims to harness the best elements of alternative investment management whilst reducing cost and providing frequent liquidity.
The new strategy is anchored around the credit cycle and has the remit to invest in non-conventional structures to capture idiosyncratic returns across the full market cycle, exploiting opportunities in periods of market dislocation.
At launch, the fund's current positioning reflects a late cycle credit expansion which the team believe has the potential to significantly impact equity volatility and companies' ability to service high debt levels.
Commenting on the launch, Fenton, said: "With the credit cycle flashing danger signals, the Fund's focus in 2019 has been to stay on the right side of market liquidity.
A rapidly strengthening dollar and forced Federal Reserve intervention in the overnight repo market in September suggests that Q4 may bring a repeat of the liquidity issues which faced the market in Q4 2018. As such, the fund is entering the final quarter of the year with peak exposure to moves higher in equity volatility and wider in credit spreads."
The fund aims to provide exposure via both long and short positions across fixed income, equity and commodity markets.
The credit-cycle framework identifies four distinct phases which require different approaches to portfolio construction and trade expression. The current phase, over-extended leverage, is characterised by high debt levels, deteriorating credit quality, rich asset values and low levels of volatility.