Shortlisted: Best credit/distressed debt hedge fund

The CQS Credit Long Short Fund pursues investment strategies expressed principally through liquid credit default swaps (CDS) and bonds. It has a portfolio of approximately 30 to 50 single names using low leverage. The fund targets net returns of 12%-15% a year offering monthly liquidity.

CQS believes the current credit environment provides compelling idiosyncratic opportunities on the long and short sides. The current opportunity set results from technical factors in credit markets such as the low default rate environment and strong flows into the asset class, broader macroeconomic such as the challenges faced in the European periphery and merger and acquisition (M&A) activity in certain sectors and the transfer of value from debt to equity holders through corporate actions.

The fund concentrates on liquid investments.

The team adheres to a disciplined investment process that looks at long, short and relative value strategies across global credit markets. The trades focus on liquid CDS and bonds, underpinned by fundamental credit research.

Thematic views span sectors and regions and are combined with bottom-up fundamental research and individual credit selection. The fund has a global mandate with historical emphasis on Europe and the US.

Portfolio management and construction incorporates in-house and external fundamental credit research, market information and external research as well as an investment process and idea generator which combine analysis of the impact of macro themes on individual credits.

Simon Finch, chief investment officer of credit at CQS, leads the four-member portfolio management team. He has over 17 years of credit markets and investing experience. The team is supported 20 analysts and by a robust operational and risk management platform. 
 
Fund facts
Full name of fund: CQS Credit Long Short Fund
Name of portfolio manager: Simon Finch
Name of investment/management company: CQS
Contact information: Michael Rummel, CQS, 5th Floor, 33 Chester Street, London, SW1X 7BL (+44 20 7201 2491; Michael.Rummel@cqsm.com; www.cqs.ch)
Launch date: April 2009
Assets under management: $153 million (at March 31, 2011)
Net cumulative performance since inception: 10.52% (at March 31, 2011)
Annualised return: 5.14% (at March 31, 2011)
Annualised volatility: 3.92% (at March 31, 2011)
Sharpe ratio: 1.23 (at March 31, 2011)
Strategy: credit long/short
Share classes: US dollar, sterling, euro and Swiss franc
Administrator: Citco Fund Services (Ireland)
Auditor: Ernst & Young
Prime broker: Credit Suisse Securities (Europe)
Legal counsel: Simmons & Simmons, Seward & Kissel
Domicile: Cayman Islands
Management fee: 2% (B2)
Performance fee: 20%
Minimum investment: $100,000
Lock-in: none
Redemption/liquidity terms: monthly with 30 days’ notice