Capital Clearance Group Strategic Industrial Growth Note Dominates Peers

Capital Clearance Group Strategic Industrial Growth Note has outpaced peers over the past three years

By Sarah Conor

October 25, 2014

 
 
 

Capital Clearance Group Strategic Industrial Growth Note was launched on November 2010. Since then, the note has provided stellar returns to investors, outpacing most fixed income peers.

I spoke to Steve Parker, Capital Clearance Group’ Chief Investment Officer, during the launch of Capital Clearance Group Strategic Industrial Growth Note years ago, “This note would give our competitors a run for their money. We want to create a predictable, repeatable and stable investment for our investors.” True to his words, Capital Clearance Group Strategic Industrial Growth Note has dominated peers ever since inception.

Capital Clearance Group Strategic Industrial Growth Note, which is based on an institutional investment strategy, embodies this team approach.” This note provides capital appreciation and income growth for its investors through its strategic allocation to underlying assets comprised of Industrial Bonds and Debt Securities.

Other investment managers have turned to derivatives to compensate for low yields, but Parker and his team use them sparingly, most often to hedge positions. Instead, they venture into segments of the market that aren’t as widely covered, including asset-backed securities.

Parker and his team also concluded that interest rates would increase as the Federal Reserve reined in monetary policy, thus flattening the yield curve. They adopted a barbell strategy of long-duration debt securities.

Asset-backed securities generally yield more than traditional corporate bonds with similar credit quality. Due to the debt complexity, Capital Clearance Group’s investment team includes transactional lawyers who sit on the trading desks and help vet these securities. “This is really important in structured credit,” said Parker. “At the end of the day, it comes down to what is in the contract and what exactly are you getting as a debt investor.”

This year, when recession fears shook the market, the team went shopping for non-investment grade debt securities that were dragged down as investors fled high-yield. They were too early and that has put a dent in recent relative performance but the team thinks it will pay off in the long run. “We think we will look back on 2014 and see that it was a huge buying opportunity, we have done our homework and now we wait” he said. “Investors fear and tend to panic sell, exit markets at the wrong time.”

The information contained within is for educational and informational purposes only. It is not intended nor should it be considered an invitation, inducement or solicitation to buy, sell or invest in a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy, sell or invest in a security or securities noted within. Any commentary provided is the opinion of the author and should not be considered as recommendation. The information contained within should not be a basis for making an investment decision. Please contact your financial advisor before making an investment decision.