Data

A third of funds reach positive territory in 2020

August has been another successful month for the CLO category as seven of the top 10 funds invest primarily in CLOs. 91% of funds made positive returns this month and, more importantly, 36% of funds have now registered positive year to date returns. That figure was 29% in July.

Millstreet Credit Fund and Napier Park European Credit Opportunities Fund have reached 13.39% and 12.89% YTD. This pushes the number of funds to have reached double figure returns for 2020 up to five. Credit multi-strategy and credit funds of funds rounded out the top 10. Oxbridge Partners represented Sandalwood Securities’ series of fund of funds – which all achieved 2% or higher this month – and was the only member of the top 10 to reach a positive year-to-date figure, with CLO funds still looking to recover from mark to market losses in March.

Leading fund

BK Opportunities Fund III

For the sixth month in a row, the top performing credit hedge fund is one that invests in CLOs. This time it is the turn of Crystal Fund’s BK Opportunities Fund III, which returned 7.58% in August. The fund primarily invests in CLO mezzanine and equity tranches. London-based Olivier Gozlan, portfolio manager for Crystal Fund, believes that the summer months were a turning point. “As default rates increased, they might have done so at a slower pace than anticipated had we known this would be a lasting scenario,” he says. “Corporates also showed more resilience than expected. As a result, secondary trading was decently active, and prices were supportive for both loans and CLOs. The robust performance of BK Opportunities Fund III is a mixture of both price appreciation and trading gains,” says Gozlan.