OYSTER European Subordinated Bonds Fund has passed the EUR 100 million mark

Monday, 10/23/2017

Launched in August 2016 by SYZ Asset Management, the institutional asset management entity of SYZ Group, to take advantage of the wave of balance sheet restructurings in the financial sector, the fund OYSTER European Subordinated Bonds has passed the EUR 100 million mark. The fund is managed by Milan-based co-portfolio managers Andrea Garbelotto and Antonio Ruggeri, both highly experienced investors in European corporate bonds with a deep knowledge of the subordinated debt market.

October 23, 2017

When launched in August last year, the fund OYSTER European Subordinated Bonds was added to the existing fixed income & credit range of the SYZ Asset Management offering, giving investors access to alternative and attractive sources of yield and total return in credit. As result of the continued balance sheet clean-ups and new regulation on the banking sector, the European subordinated bond space is rapidly expanding and today exceeds EUR 660 bn*. Despite attractive yields, ninety-five per cent of issuers have investment grade ratings and solid fundamentals. With a current average yield similar to the high yield sector, subordinated bonds offer investors new and compelling sources of return.

Early investors in the fund have benefited from the attractive returns over the past year that have been supported by active management of its expert investment team. The significant commitments to the fund since its launch are a testament to the opportunity of the strategy and the performance achieved. The fund’s approach appeals to investors seeking diversification in their bond allocation, as well as those searching for higher yielding bonds via a robustly risk-managed process.

Diversified exposure to European subordinated bonds

The strategy provides investors with an actively managed (not benchmark-driven), diversified exposure to European subordinated bonds. This asset sub-class has recently gained in attractiveness due to regulatory changes that have made issuing traditional debt expensive or in case of financial institutional quite challenging. The issuance of subordinated debt is becoming ever popular with both issuers due to its favourable balance sheet impact and investors in terms of yield and total return potential.

Managed by a team of highly experienced investors in European corporate bonds

Since its inception**, the fund has returned +8.4% and is ranked in the 10th percentile by Morningstar and the 11th percentile by Lipper relative to their respective peer groups***. The team, who have an average industry experience of 23 years, manage both the OYSTER European Subordinated Bonds Fund, as well as their ancillary fund, OYSTER European Corporate Bonds, which has also enjoyed solid success.

“The management philosophy showcases a high-conviction portfolio”, said Andrea Garbelotto. “We take time to carry out in-depth research and we allocate meaningfully to maximise the value of our analysis efforts. We have carefully built our exposure to the segment and developed proprietary models to select the best mispriced opportunities”.

Katia Coudray, Chief Executive Officer, SYZ Asset Management added: “The opportunity in subordinated debt is a long-term story that takes advantage of structural changes for banks and insurance companies, who need to contend with both balance sheet optimisations and new regulations on solvency. Investors have predominately looked to profit from these structural shifts via equities, but as we have shown, subordinated debt is also a very attractive way to invest in this segment”.

The OYSTER European Subordinated Bonds fund is registered in eleven European countries: Austria, Germany, Belgium, France, Italy, Luxembourg, Spain, Netherlands, Sweden, Switzerland and United Kingdom.

Source: Bloomberg, BofA Merrill Lynch, data as at September 2017
** August 31, 2016
*** As of October 6, 2017