Manulife CQS Investment Management is seeking approximately $1 billion for the fourth iteration of its CQS Regulatory Capital Relief Fund, leveraging the growing market for significant risk transfers (SRT). The fund is targeting an internal rate of return (IRR) of about 13%, building on the performance of its predecessor, which achieved over 11% IRR as of the end of the first quarter. The firm is using debt to enhance returns, positioning the fund to capitalize on increased demand for SRT strategies among institutional investors.

The previous fund vintage delivered strong results, reflecting Manulife CQS's expertise in structured finance and regulatory capital solutions. Investors are being tapped for the new fund based on the track record and the broader market momentum behind SRT transactions, which allow banks to transfer credit risk to private investors.

Market participants note that SRT vehicles have gained traction as banks look to optimize their balance sheets amid evolving regulatory requirements. Manulife CQS aims to deploy the $1 billion across diversified SRT opportunities, targeting both senior and junior tranches to balance risk and return.

The fundraising effort underscores continued investor appetite for yield-oriented strategies in fixed income markets, with Manulife CQS projecting sustained double-digit returns driven by structural demand and strategic use of leverage.