Alternative investments

Asset managers are targeting massive amounts of capital to benefit from credit market stress as the coronavirus leaves many companies in need of support.

The poor showing may lead investors to question why they’re paying some of the highest fees in the money management industry.

Risk managers must be especially vigilant about the bets their traders are making to profit from current market dislocations brought on by the coronavirus.

Instead, the billionaire opted for a lucrative credit hedge that earned his firm about $2.6 billion in profits when the market plummeted.

Cash-hungry REITs are selling their portfolios at steep discounts as talks heat up over similar deals and even equity stakes in the companies themselves.

“We have to have a roadmap for how to deploy capital in this environment,” says the global head of alternatives for the firm’s asset management arm.

In need-for-speed markets lashed by the spreading coronavirus, this breed of rules-based trading is paying off.

The asset manager is targeting as much as $1.5 billion in volume annually, up from about $300 million per year about three years ago, the firm says.

Broad-basket commodity sector funds, as well as those long on oil, natural gas and precious metals, accounted for more than half of the laggards.

The investing strategy “is close to saturation,” and the cost of keeping up with the competition may be to blame, a new study suggests.