Vivriti Asset Management’s Performing Credit Strategy: A Successful Investment Journey

Lead: In a recent interview with ETMarkets, Raghunath T, Head of Credit at Vivriti Asset Management, highlighted the remarkable performance of their investment funds, specifically the Emerging Corporate Bond Fund and Alpha Debt Fund. Launched in 2021, these funds have provided investors with consistent double-digit returns amidst volatile equity markets. With an investment focus on mid-sized and emerging corporates in India, the strategy has yielded an average credit risk premium significantly above government securities, prompting investor confidence in the credit market landscape.

Consistent Performance in a Volatile Market

Key points:
– The Emerging Corporate Bond Fund surpassed 13% return in February, while the Alpha Debt Fund achieved over 11%.
– The monthly performance is driven mainly by regular coupon earnings and potential redemption premiums on maturing investments.
– The funds have maintained double-digit performance over a six to twelve-month period, even during turbulent equity markets.

Investment Objectives of the Funds

Key points:
– The focus remains on debt instruments from mid-sized corporates, which often lack direct access to capital markets and predominantly depend on bank financing.
– Investments have spanned across ~30 emerging corporates, generating a notable credit risk premium of approximately 700-800 basis points over government securities.
– Portfolio diversification includes essential sectors like infrastructure, manufacturing, services, and finance.

Understanding Performing Credit Investments

Key points:
– Performing credit investments differentiate from venture debt by targeting established, profitable companies seeking growth capital.
– Investments made via Performing Credit funds are secured against cash flows and business assets, minimizing exposure to market volatility.

Risk-Adjusted Returns and Investment Considerations

Key points:
– Expected returns for investors with a 4-year horizon range between 11-13%, after tax and expenses.
– While the Emerging Corporate Bond Fund and Alpha Debt Fund are closed for new subscriptions, Vivriti continues its strategy through its Diversified Bond Fund – 2 (DBF-2).
– Key investment considerations include:
– Fund manager’s track record of consistent returns and capital returns to investors.
– The necessity of a strong team and infrastructure for effective managing of increasing fund sizes.
– The macro environment influences, where credit markets present a steadier return alternative during equity volatility.

Navigating Interest Rates and the Corporate Bond Market

Key points:
– The funds focus on fixed-rate debt papers, allowing stable returns even during market interest rate fluctuations.
– The Indian Corporate Bond market is valued at approximately $600 billion, representing about 25% of the overall bond market.
– Growth predictions during the next few years suggest an increase of over $75 billion annually, reflecting an ongoing trend towards deeper bond markets involving both issuers and investors.

Conclusion: As India aspires to be the third-largest economy by 2047, a robust and well-structured bond market will play a crucial role in supporting sustainable growth and providing diversified investment opportunities for investors. With an emphasis on credit market stability and the gradual deepening of investment options, Vivriti Asset Management stands at the forefront of this transition, poised to boost investor returns through its strategic approach to performing credit.

Keywords: Vivriti Asset Management, Emerging Corporate Bond Fund, Alpha Debt Fund, credit investment, corporate bond market, investment strategy

Hashtags: #VivritiAssetManagement #CreditInvesting #CorporateBonds #InvestmentStrategy #FinancialMarkets #Returns #BondMarket



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