Quantitative hedge fund shop CQS is taking advantage of the uptick in interest in its specialty: convertible bonds.
The London-based firm, which manages US$6.7 billion, has raised US$750 million for its convertible bond strategies over the last six months, all of its from institutional investors. And the firm’s chief investment officer believes that money is just the beginning.
“I don’t think it’s a fad,” Oliver Dobbs told the Reuters Private Equity and Hedge Funds Summit. “These flows are likely to continue.”
More than one-third of the new money, US$270 million, went to CQS’ new long-only Convertible Opportunities Fund, which returned 11.62% last year after its debut in June.
Doubs said he expects this year to be a good one for convertibles, although it won’t likely be as good as last year, when the strategy, hard-hit in 2008, bounced back. But the convertibles market has stabilized, and pension funds have been pouring in to diversify their portfolios.
Most of the CQS inflow has come from European pension funds, Dobbs said.