Investment grade corporate debt, non-agency residential and
commercial mortgages, high yield corporate debt, and private equity distressed
debt all constitute recommended potential mandates in the credit markets,
according to director of research at US-based Wurts and Associates, Eric
Petroff.
While Petroff acknowledged it was an institution
preference as to how much risk to take, he said bank loans/mezzanine debt and
hedge funds were not recommended.
According to Wurts the recent economic and financial market
turmoil has fundamentally altered the landscape of investment opportunities in
credit-based income investments, and the scope and breadth of these
opportunities necessitates a broad examination of the credit universe.
“In our estimation, liquid public market investments appear
to offer a compelling trade off between risk, return, liquidity, ease of
deployment, and other operational issues, with other illiquid opportunities
making sense secondary considerations.
“When we speak of return efficiency, we refer to the
combination of several factors; liquidity, audit considerations, fees, standard
deviation of returns, and total return on investment. We believe public markets
offer the best combination of these factors. Therefore we believe traditional
public market opportunities should be the primary focus for investors, with
secondary consideration being given to private opportunities.
