European financial markets have reached acute valuations, supported by the ECB’s bond purchase programme, the weak euro, ultra-low sovereign yields and rising economic optimism. Meanwhile, significant risks have the potential to derail markets: elections in Spain and Portugal; Greece exiting the euro; and increasing late-cycle behaviour, such as heightened systemic risk, rising dispersion, periodic volatility, and liquidity mismatches.

Most hedge funds set up to achieve double-digit returns, which they need to do to justify their high fees. But few of them achieve those performance targets and take too many risks trying to achieve them.

And we believe there is a fundamental flaw in many funds’ model: only being able to short credit (and not equities) means most funds are held back by the UCITS framework. In addition, some funds are restricted by inefficient balance sheet, high borrowing costs for synthetic shorting and relative few negative catalysts for shorting credit.

We are convinced a mid-to-high single digit return target is realistic, and right for investors in our Credit Events Fund. We believe this is achievable and sustainable with a concentrated but balanced risk approach. Meanwhile, our fees are highly competitive and well below the “two and 20” model employed by traditional hedge funds.

We utilise a real time quantitative flagging tool – REF or the Roxbury Event Flags platform as part of our investment process. REF models equity, credit and fixed income asset classes (both cash and derivative) – we believe this is rare in the UCITS market. REF turns data into potential opportunities for the Roxbury Investment Team who focus on a current defined universe of 600 corporate and financial event names that have been historically tracked, often invested and analysed.

Our Investment Team, led by experienced special situations credit manager Sohail Malik, conducts the fundamental analysis on each idea to provide the qualitative analysis, rigour and insight that deepens our conviction in each investment.

Once we have identified an opportunity and analysed it thoroughly, we consider how best to implement it by choosing our preferred investment instrument. Our focus is on credit. But our remit is flexible, so whether we are investing on the long or short side, we can use high yield bonds, financials, sovereigns, CDS or equities to achieve our objectives.