Arini Capital Management, the London-based credit specialist, has seen its marquee strategy shed another 7 per cent this month, exacerbating losses that now exceed 21 per cent for the year. The firm, which grew to a $22 billion-in-assets firm in just five years, has informed investors of a 6.91 per cent loss in its master fund between the start of October and the end of last week. These losses represent some of the biggest at a major credit hedge fund this year and mark a reversal for a firm that previously attracted significant capital from sovereign wealth funds and large endowments.
While the full portfolio details remain private, the downturn highlights the volatility inherent in riskier credit strategies. A simple, systematic tilt towards riskier slices of the credit market -- a known practice in the bond investment industry -- likely underpins these results, as evidenced by historical analysis showing that adding extra credit risk can explain significant performance variance. The situation underscores the challenges new and established firms face in maintaining early stellar performance in the current credit environment.
Source: Financial Times Companies · Summarized by HeadlinesBriefing