Structured credit: opportunities through complexity

Interest in structured credit solutions is growing because they offer attractive yield premiums over corporate, covered and government bonds. In addition, the floating-rate character of these products provides protection against interest-rate volatility. Since 2001, Union Investment's clients have benefited from its excellent market access and tailor-made structured credit solutions.

Our approach is to seek the optimal balance between the conflicting needs for safety, returns and liquidity. This philosophy is reflected in the consistently well-balanced risk profile we have achieved historically. Efficient risk management enables us to achieve a relatively high level of liquidity. Factors of relevance to the sale of an instrument are taken into account even before we purchase it, and risks are monitored continuously and managed with discipline.

The high complexity that is a key feature of the global structured credit markets is also what gives this asset class so much scope for opportunities. We exploit the characteristics of individual market segments and select securitisation structures very carefully. This enables us to achieve an attractive risk/return profile. Our selective and diversification-oriented approach allows us to tailor the construction of individual portfolios perfectly to the needs of our institutional clients.

Our aim is to earn complexity premiums. A big team with extensive expertise, dedicated tech infrastructure and sophisticated information systems are key to collecting these premiums in the structured credit market. Where necessary, we negotiate CLO terms directly with issuers in order to get the best deal for our investors or reduce risks in a targeted manner.