Specialist credit hedge funds explained

Specialist credit hedge funds break away from the black-box strategy by using quantitative analysis as a basis for research rather than controlling all fund decision-making

Mention a credit hedge fund and many people think of the occasional meltdown of a fund investing in asset-backed securities. However, the publicity surrounding these collapses obscures the fact that, in reality, there is a tremendous amount of diversity among hedge funds investing in the credit markets. In particular, there are a number of hedge funds - which are classified as specialist credit - that generally employ lower leverage than would be typical for a hedge-fund strategy, and choose credit securities based on fundamental analysis rather than taking directional views (similar to the...