Quarter in Review
In the financial markets, 4Q 2023 proved to be extremely volatile and, ultimately, one of the strongest quarters in recent history.
In October, markets continued to trade lower, as they had in September, driven mainly by the relentless rise in US government bond yields. The US 10-year bond yield, which had traded at 3.33% in April, started October at 4.58% and hit an intra-month high of 5.02% before falling to 3.90% by year-end.
It was a similar story in both credit and equity markets; USHY as measured by CDX HY saw spreads widen in October by 44bps before reversing to finish 167bps tighter at 360bps. European equities (as measured by Eurostoxx 50) sold off from 4174 at the start of October to 3995, before rallying back to 4528 by the end of the fourth quarter.
Against this backdrop, we are pleased with the performance of the Aperture Credit Opportunities Fund, which generated 2.97% for the quarter and 5.29% over the year. This was helped significantly by our decision to take off all duration hedges during September and October, increasing the outright dollar duration (DVo1) of the Fund for the first time since late 2021, as well as increasing the outright risk-adjusted long credit posture from ~15% to ~25%.
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