Ingrid Neitsch joined Ignis Asset Management’s specialist alternatives division in September as head of credit strategies.
She is responsible for investments in hedge funds and private equity in credit markets and oversees a fund that invests in specialist, low liquidity credit strategies benefitting from opportunities created by recent and on-going market stress. Prior to joining Ignis Neitsch worked at Financial Risk Management.
What are your key priorities for the new role?
Ignis Advisors is already a substantial investor in credit strategies, and the role involves building on existing investments and developing specialist products for client-specific needs. The first product is the Strategic Credit fund, which launched 1 October, and the role involves manager selection and portfolio management. Other products in development, include a fixed income alternative strategy and longshort credit fund.
Do you think there’s a risk of investors giving up on traditional forms of credit in the current yield climate?
No. There has been a consistent strengthening in liquid credit assets as investors have felt more comfortable with the macro environment, in spite of the continuation of known geopolitical and financial risks. In the absence of new risks appearing, spreads are likely to remain tight, supported by compressed interest rates, low realised default rates and cash needing to be invested in an overall low return environment.
Do you think institutional investors make the most of the illiquidity premium?
No. The illiquidity premium in credit has continued to expand, and stems from the liquidity shock experienced in credit markets end- 2008. Institutional investors recognised that their liquidity tests had to become more stringent and changed their risk parameters as a result. In spite of widening return differentials, it is difficult to reverse these risk controls. Regulatory changes implemented to safeguard the financial system have decreased banks’ ability to position risk, putting further pressure on liquidity and decreasing the investable pool of assets. The excess return has become very attractive for those willing to tolerate illiquidity.
What are the biggest challenges facing institutional investors?
Institutional investors are faced with meeting target returns, responding to regulatory capital requirements and responding to changing demographics within their constituent base. The biggest challenge is balancing these competing requirements in an environment that offers increasingly limited investment opportunities under tighter risk constraints.
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