Aperture Credit Opportunities Fund - Q4 2024 Manager Commentary
In Short
Aperture Credit Opportunities Fund: Commentary for Q4 2024
Quarter in Review
The highlight of the quarter was always going to be the US presidential election, and it did not disappoint. The Trump clean sweep was greeted positively by risk markets with US equities rallying 1.84% (SPX) and US high yield (HYG US) spreads tightening 18bps to 312bps over the quarter. However, government bonds fell, and yields rose (10-year UST rose from 3.78% to 4.54%) as investors fretted over potentially higher inflation because of Trump’s tariff proposals.
Although spreads tightened, US HY bonds (HYG US) delivered a marginally negative total return of -18bps whereas European HY bonds (IHYG LN) had a positive return of 1.47%. Investment grade bonds (LQD US) performed worst delivering -4.1% over the period. As the quarter wore on and yields moved higher, idiosyncratic moves (up and down) increased – mainly driven by changing operational expectations in a potentially higher-for-longer-rate environment. The best performing segment across credit was Leveraged Loans, and the US loan market (IBXXLLTR) delivered a total return of 2.35% in the quarter as the asset class benefitted from its floating-rate structure.
