Guggenheim’s Scott Minerd deploys $7B in credit market plunge

“It’s time to start nibbling, not gorging on these values,” Guggenheim Partners CIO Scott Minerd said in a note to investors.
“It’s time to start nibbling, not gorging on these values,” Guggenheim Partners CIO Scott Minerd said in a note to investors.
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For all the concern about the global economy, Scott Minerd has found a big chance to buy.

The chief investment officer of Guggenheim Partners deployed about $7 billion in depressed credit markets in mid-March, almost three times that of private equity giant KKR, according to people with knowledge of the matter.

Minerd spent almost more than a third of that sum on high-yield products, including the iShares iBoxx High Yield Corporate Bond ETF (HYG), said the people asking not to be identified because the information isn’t public. The fund tracks junk bonds. Still, he has been a critic of the Fed’s historic moves to buy even low-rated debt. Guggenheim stood on the sidelines at the start of the year and took off credit hedges to reverse a short position on March 16, the people said.

The next day, Minerd told investors in a letter that the “the opportunity to sell risk assets has passed.” Minerd, who recently suggested the S&P 500 could fall to 1,500, maintains a cautious long-term stance on the economy.

“As this situation continues to play out, we will slowly increase our risk tolerance and watch for more buying opportunities,” he said in an April 5 note. “It’s time to start nibbling, not gorging on these values.”

“I do believe that clients sometimes get too caught up in expense ratios,” an expert says.
April 13

Many funds were forced to sell assets in March in a push to meet redemptions, while others faced margin calls. That was a factor in the decision by KKR to spend about $2.5 billion in credit markets. Minerd’s $14.5 billion Guggenheim Total Return Bond Fund (GIBIX) has risen 4% this year, beating 87% of its peers.

Other credit managers including Pimco have begun to raise money to start capitalizing on bonds that have been whacked during the coronavirus pandemic, expecting to either gain from an eventual recovery or through restructurings.

A spokesman for Guggenheim declined to comment.

Bloomberg News
Asset management Bond funds High yield loans Fixed income Guggenheim Securities ETFs Junk bonds Money Management Executive
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