CIFC launches UCITS fund for CLO investment

US-based credit manager CIFC has launched a UCITS fund to give European investors access to its structured credit investments.

Last year, CIFC told PDI that launching a UCITS fund would form a key plank of its expansion into the European market. The product is its first to be launched in Europe since the firm opened a London office in 2018.

CIFC Global Floating Rate Credit Fund will invest in more liquid tranches of CLO bonds with at least half of its capital invested in BBB-rated bonds. The fund is domiciled in Dublin and launches with more than £50 million (£65 million; €58 million) of commitments. It is managed by Jay Huang and targets a return of between 7 percent and 8 percent per annum.

Joshua Hughes, European managing director at CIFC, said: “We believe many European investors, as well as those further afield in Asia, favour or require the liquidity and regulatory oversight that the UCITS regime brings, so we’re pleased to have been able to create the fund within this structure.”

The fund intends to offer a diverse exposure to CLOs not normally available through direct investments, with between 50 and 100 CLOs. It will also be actively managed to add an additional layer of risk management for investors.

In 2018, CIFC CEO Steve Vaccarro told PDI the firm was looking at UCITS as a way to expand the pool of European investors it could approach and how it could tailor the product to suit CLO investment.

“UCITS don’t normally allow you to allocate more than 10 percent to syndicated loans, but you can put CLOs into UCITS, so we have an ideal platform to launch a UCITS CLO strategy,” he said last June.

The fund will have daily valuations and weekly trading and will hold approximately 70 percent of its assets in US CLOs and 30 percent in European CLOs. The fund will be US dollar denominated with hedged currency share classes in sterling, yen and euros.

CIFC opened its London office in May 2018 and hired Hughes as its first employee in the city. In October the firm announced the appointment of Dan Robinson as chief investment officer for Europe.