Oppenheimer partners with Apollo credit

Apollo will invest up to 5 percent of the $6bn GSIF vehicle into credit on behalf of Oppenheimer.

OppenheimerFunds and Apollo Global Management’s credit arm have signed a partnership agreement. Under the tie-up, Apollo Credit Management will act as sub-sub-advisor to the Oppenheimer Global Strategic Income Fund (GSIF), a $6 billion vehicle by assets. 

GSIF traditionally focuses on fixed income investments aiming to maintain low volatility. The new agreement will give the vehicle exposure to structured credit, mid-market loans, direct real estate investments and insurance-linked securities. 

The vehicle is currently 46 percent invested in high-yield corporates, with investment grade corporates and securitisation both at 17 percent each, the next highest asset allocations. The new partnership envisages ramping up the Apollo-advised proportion to between four and five percent over time, PDI understands. 

The partnership is structured as a separately managed account with Apollo, customised to the specific requirements of GSIF. The capital provided by GSIF will be committed to opportunities sourced by the credit specialist alongside its other investors and pooled funds, a source familiar with the agreement said. 

The aim of the shift is to improve yield and overall risk-adjusted performance as well as diversify the fund to minimize volatility, Oppenheimer said in a statement.

“As a progressive money manager, OppenheimerFunds consistently strives to add value for our clients. Apollo Credit Management offers a wide range of alternative investment credit strategies that complement our strong in-house fixed income capabilities, which will help us continue to deliver a very compelling offering,” said Art Steinmetz, chairman, chief executive and president of OppenheimerFunds. 

The partnership comes as an increasing number of fixed income investors seek alternative sources of yield amid declining returns in the traditional and more liquid fixed income markets. 

“We are delighted to partner with OppenheimerFunds on this innovative approach to provide their investors with access to Apollo’s flagship liquid alternative credit solution. These credit exposures, which have historically only been available to Apollo’s institutional investors, offer significant yield advantages and diversification to the individual investor,” said Marc Rowan, Apollo co-founder and senior managing director. 

GSIF’s portfolio assets totalled $6.1 billion as of 30 June. 

OppenheimerFunds was founded in 1959. It is a subsidiary of US insurer MassMutual and has offices in New York, Dallas, Denver and Rochester. 

New York-headquartered Apollo Global Management had around $163 billion in assets under management as of 30 June.