Peripheral Europe has proved a difficult hunting ground for many debt investors over the past year but Dexia AM’s Patrick Zeenni has become decidedly more bullish on its outlook.
The Citywire Alternative Ucits A-rated manager, who runs the €317 million Dexia Long Short Credit fund, said he is cautious but confident when it comes to reallocating to nations which had been tarred with fears of contagion over the past 12 months.
He said: 'When we look at peripheral names, we went completely underweight on peripherals last year and we made good positive performance in that year.'
'We got back into peripherals utilities at the end of last year and it has worked well for us.’
Currently Spain, Italy, Portugal and Ireland are all present in Zeenni’s top 10 geographic allocations.
The largest credit exposures, however, are to the German market. Allocations to German make up 7.3% of the fund’s net geographic exposure.
This is with holdings in cable television firm UPC Germany and engineering firm Man AG being among his five largest long positions.
Meanwhile, Zeenni also lists German car giant Volkswagen among the largest positions in his short book.
‘One of the key investment criteria since last year has been the sovereign risk. This is something we are very concerned about within bonds, so we are looking at the nationality of the issuer,’ Zeenni added.
The Dexia Long Short Credit fund has returned 3.5% in the year-to-date. This compares to the LIBOR EUR 3 Months which rose 0.52% over the same period.
Patrick Zeenni is set to feature in the Alternative Ucits section of the December-January edition of Citywire Global magazine.