GAM Star Credit Opportunities
This is a high-income bond fund with a unique strategy. The idea is to invest in the ‘junior debt’ of investment grade companies. This allows the fund to generate a good income, whilst still keeping a high-quality portfolio. GAM Star Credit Opportunities fund is heavily invested in the debt of financial companies, as this is where the best opportunities often lie. It has a low turnover strategy, as the managers' process looks for bonds they can buy and hold. The funds’ higher yield reduces its interest rate sensitivity versus many of its peers, which can be particularly valuable.
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Anthony Smouha, Co-Manager Anthony Smouha is the CEO of Atlanticomnium S.A., a member of its Management Committee, and a Fund Manager for the GAM Star Credit Opportunities strategy. He has managed GAM funds since joining in 1992 and co-manages the GAM Credit Opportunities strategies. With over 40 years in bond markets, Anthony has served as Head of Bond Trading and Sales at Soditic SA/SG Warburg Soditic SA in Geneva and worked in Investment Banking and Debt Capital Markets at Credit Suisse First Boston in London. He holds an MA Cantab Hons in Economics from the University of Cambridge and is based in Geneva.
Gregoire Mivelaz, Co-Manager Gregoire Mivelaz is a Fund Manager and a member of Atlanticomnium’s Management Committee. He joined Atlanticomnium in 2009 and co-manages the GAM Credit Opportunities and GAM Climate Bond strategies. With over 20 years of experience in bond markets, he has held roles such as Head of Credit Research and Credit Analyst. Gregoire graduated from the University of St. Gallen with a BA in Finance and Capital Markets, an MA in Economics, and holds the CAIA Charter as well as the CFA UK Certificate in ESG Investing. He is based in Geneva.
Patrick Smouha, Co-Manager Patrick Smouha joined Atlanticomnium in 2012 and now co-manages GAM’s credit opportunities strategies with Anthony Smouha and Gregoire Mivelaz. Initially an assistant fund manager, Patrick was responsible for dealing and execution and has been on Atlanticomnium’s Investment Committee since 2016. Between 2012 and 2016, he handled bond research and fund management tasks. He holds a BSc in Management from the University of Lausanne (HEC) and an MSc in Finance from the University of Geneva (HEC).
Romain Miginiac, Co-Manager Romain joined Atlanticomnium in September 2018 and co-manages the GAM Sustainable Climate Bond and GAM Credit Opportunities strategies. Before this, he was a credit analyst at Aberdeen Standard Investments, focusing on European financial institutions. Romain also has experience in financial services audit with KPMG and wealth management with UBS. He holds a bachelor’s degree in economics from the University of Geneva and a master’s degree in finance from ESADE Business School. Romain is a CFA® charterholder and has passed the CFA UK's Certificate in ESG investing. He is based in Geneva.
Anthony Smouha, Co-Manager Anthony Smouha is the CEO of Atlanticomnium S.A., a member of its Management Committee, and a Fund Manager for the GAM Star Credit Opportunities strategy. He has managed GAM funds since joining in 1992 and co-manages the GAM Credit Opportunities strategies. With over 40 years in bond markets, Anthony has served as Head of Bond Trading and Sales at Soditic SA/SG Warburg Soditic SA in Geneva and worked in Investment Banking and Debt Capital Markets at Credit Suisse First Boston in London. He holds an MA Cantab Hons in Economics from the University of Cambridge and is based in Geneva.
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Company Description
Founded in 1983, Global Asset Management (GAM) operates in more than 10 countries worldwide, with offices in Europe, North America and Asia. Atlanticomnium has managed assets for GAM since 1985 and is currently the investment adviser for multiple GAM bond funds. Jeremy Smouha, CEO of Atlanticomnium UK (Ltd), was a founding member of GAM.
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Quote from the Fund Manager
People overcomplicate the bond world. We look for the simple themes and credits and leave advanced mathematics to others. Elementary compound interest comes from solid companies and a good yield. This means asking the right questions.
Anthony Smouha
Co-Manager
Investment process
The managers prefer investment grade companies but also like junior or subordinated debt. Junior debt is debt that has a lower priority for repayment than other debt claims in the case of a company default. They believe the chances of investment grade companies defaulting is low, but they still benefit from the high coupon of the higher yielding junior debt.
Many of their best opportunities are found in the debt of banks and insurance companies. The team believes the higher capital buffers enforced by regulators has made these businesses much safer. GAM Star Credit Opportunities fund is mostly a buy and hold strategy, which helps to cut down on transaction costs. It typically has between 130 and 200 holdings. Around 70% of these holdings will be core, providing some income and capital preservation. The remaining 30% will provide high income and diversification.
Risk
Risk control starts with the managers' goal of finding long-term holdings in sound companies with low default risk. If there is a fundamental change they will assess and, if necessary, cut the position. They have their own risk analysis, which is run daily, as well as input from the GAM risk team.
GAM Star Credit Opportunities fund has a heavy bias towards financials which means that it can be volatile relative to its peers, particularly in times of market stress. However, short term volatility should not affect the ongoing income payments the fund receives, as long as their fundamental analysis is correct.
ESG
ESG - Integrated
ESG is integrated within this fund’s process as part of the comprehensive bottom-up stock analysis. There is a framework form incorporating specific factors which the manager follows, informed by the Sustainability Accounting Standards Board (SASB) Materiality Map. This identifies sustainability issues that are most likely to create a financial impact on the company’s operations, and whether this will have an impact on the future share price. A lot of this work will be incorporated into determining the cost of equity for the company, to give a full understanding of the potential cost to the company and the impact on the stock’s valuation. The result of this work is displayed prominently on the front of the investment template for any stock. The fund may not exclude all companies that investors may consider ‘ESG negative’, however. The analysis is done on a case-by-case basis and determines whether the ESG issues are material, whether they will have an impact on the firm, and whether the firm is looking to improve on any issues.
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