Loic Fery, the founding Director of Chenavari, a management company based in London and specialising in credit markets, lets us know the investment philosophy his flagship "The Chenavari Multi-Strategy Credit Fund

Can you tell us about your career?

Prior to setting up Chenavari, I began my professional career in the banking sector. In fact I spent more than 10 years with the Society General Group in Asia before joining Calyon, the investment bank division of the Credit Agricole in London in 2001 where I established and managed their Credit/Structured Credit departments for 7 years

How was Chenavari started ?

I started Chenavari in London in 2007 with 5 other associates and a team of professionals experienced in credit markets. In the context of this difficult time with the start of the financial crisis, our proven expertise to institutional investors allowed us to start our business with about 50 millions euros of "seed money". Our performances today speak for themselves as we have managed to significantly grow our assets which today amount to 250 million euros under alternative management, to which we are adding management mandates for "long only" close to at least a billion. Our development and our performances have in fact been honoured twice last year by the financial community in New York as well as in London when we received the "Awards" of the industry.

Could you provide more details on the performances of "Chenavari Multi-Strategy Credit Fund" and its investment philosophy?

Chenavari Multi-Strategy Credit Fund recorded 16 months of positive investment (trading) since its creation in October 2007. The net returns in management fees rose by 33.43% last year whilst still maintaining our level of volatility at an acceptable level of under 6.5% thanks to our rigorous management of risks.

The investment philosophy of the fund is relatively simple. We have decided to focus our scope of operation to bonds issued by companies belonging to the "crossover" market" category, which includes non-investment grade companies, as defined by the rating agencies, as being between BB+ and B. These bonds present, in effect, the advantage of offering high return rates as opposed to government bonds for example owing to its classification "High Yield". But a rigorous selection of companies, in the heart of the section "non investment grade" is obviously necessary, to avoid the numerous pitfalls of the market. We have our team of fundamental and quantitative research analysts which are permanently identifying the best investment opportunities. With the fund, having a "market neutral" approach as far as variations in credit spreads are concerned, we can nevertheless, be led to covering all or part of our accounts on the credit indexes like iTraaxx Crossover, to limit the volatility of the fund.

From the point of view of a specialist of the credit market, what do you think of the Sovereign Debt problem?

The financial crisis has shifted/rocked the payment difficulties of numerous banks and companies to the Sovereign States who have just been putting out fires. Today, the financial community in its entirety, is asking many questions about the ability of countries to pay their debts, including the most solvent of them. An increase in inflation, tax increases, or a recovery in the global economy, as expected in 2010 could result in a progressive reduction in the debt. For my part, I believe that the solution to the problem of solvency of certain countries is not a simple one and will probably be solved by a combination of these three strategies.

Can you verify that there is a movement of the Hedge Funds from London to other more financially friendly places?

We are in effect seeing that in London there is a tendency towards decentralisation for certain alternative fund management teams to, in particular, Switzerland and Spain. The new tax measures of Gordon Brown’s government towards the financial community are certainly not new. It is however, detrimental to France that it does not take advantage of this phenomenon; perhaps it would be a unique opportunity for our country to encourage the return to France, from London of a large number of its citizens. Having said that, as far as we are concerned, we do not envisage leaving London , but we have decided to open an office in Paris in order to be closer to our investors from French institutions. The British capital is still in the foreground of major financial centers where one finds a concentration of many skills, particularly in the domain of finance and the management of assets.

Chenavari Credit Partners have recently acquired the team Structured Credit of SGAM AI (Via Lyxor). This is the biggest acquisition of its type that has ever occurred

Chenavari has in effect been retained by Lyxor to address the management activities which Credit inherited from SGAM AI. The fact that one of the global leaders of "managed accounts" - who has to be a specialist in due dillegences of companies, has displayed his confidence in us, is an important indication of recognition for our company. In other respects, we are happy to be able to welcome people into Chenavari, who have managed transactions at Lyxor. The team can only be strengthened and allow us, as well as the investors who are going to accept this transfer of management, to benefit from a continuity in management with the same director; this continuity is fundamental to the future performance of these mandates.