Over the past few years, various financial concepts have been developed by our partners within the framework of consulting mandates or IT projects, which have meanwhile reached market maturity. At this point, we would like to use Blu Income to provide an exemplary insight into such a consulting assignment, which resulted in a solution with integrated Quasol know-how.
The Blu Income Fund
The private lending market has come into focus in times of low interest rates as an alternative and attractive source of returns. In the primarily qualitatively driven credit market, the quantitative accompaniment of such an investment process had its special appeal. Blu Family Office Ltd. was keen to develop a scientifically substantiated alternative solution that would allow steady income even in times of low interest rates. For this purpose, it should be invested in short-term and secured loans.
The lending market was a previously blank terrain for Quasol. We dedicated ourselves to this challenge with curiosity and have been rewarded with many insights. The result is a successful rule-based process that definitely stands out in this environment. With the help of a broad diversification between countries and sectors, a strategy has been developed that allows attractive bonuses at very limited risk. In addition, strict attention was paid to ensuring that only secured loans are taken into account and an “asset-liability mismatch” is avoided.
The findings of the project and the resulting solution can be found in the article “Private Lending as a Source of Fixed Income Yields”, published in The Journal of Wealth Management, Jg. 20, No. 3, pp. 33-44 which we will gladly provide to you if needed. It describes in detail the opportunities and risks of such investments as well as the procedure for concrete portfolio construction under consideration of a professional due diligence process. It turns out that such a strategy can efficiently capture risk premiums.
Since November 2016, the strategy has been transferred to a fund format and live, with the performance to date meeting all expectations. Of particular note is the continuity inherent in the resulting product. The track record of the product, which has been in existence for three years now, impresses with its consistency and speaks for the conclusiveness of the underlying analyzes. More information is available directly on the Blu-Homepage.