April 9, 2017
North Channel Bank Introduces New Fund Concept with Early Warning System.
Unique stock selection and risk monitoring with Moody's CreditEdge®.
Together with its partner, the investment boutique AHP Capital Management GmbH in Frankfurt, North Channel Bank has introduced a fixed income fund. The special feature of the Mayence Fair Value Bond Fund (Mayence stands for Mainz, in French), lies in its unique stock selection and risk monitoring through Moody’s CreditEdge®. “The Mayence Fair Value Bond Fund is a bond fund that invests in corporate bonds worldwide,” explains Gunnar Volkers, Managing Director of North Channel Bank. “Our bank is entrusted with asset management, AHP Capital Management GmbH is sub-advisor.” Lars Hunsche, who marketed and co-developed Moody’s CreditEdge® in his role as Managing Director for 16 years, is responsible for Advisory at AHP.
The model of the Mayence Fair Value Bond Fund is based on an options price theoretical approach that is calibrated with the aid of the world’s largest default database. Three factors play the main role: company value, liabilities, and volatility of the company value. Users are also able to quickly filter out attractive bonds from a universe of 34,000 companies. The most important information is the fair value spread, which is compared with the spread in the market. In addition to the seniority of a bond, the maturity, the size of a company, and the interest rate level, this also takes into account the risk tolerance of the market, also known as Lambda. This value fluctuates over time and has a direct effect on credit spreads.
“The objective of this fund concept is to buy bonds with a credit spread that is too expensive compared to the market and sell them again when the spread has aligned itself with the market level,” Volkers continued. “Regular monitoring enables interesting new entry-level brands to be identified very quickly and exit times to be identified at an early stage. With the introduction of this fund, this concept and the use of this model are available in a public fund configuration for the first time.”
North Channel Bank GmbH & Co. KG was founded in 1924 as the private bank Bankhaus Oswald Kruber, located in Berlin. In 2009, a group of North American investors with expertise in the Life Settlement sector acquired the bank and renamed it North Channel Bank. In the following years the bank developed into one of the leading institutes in US Life Settlement financing. With the takeover of the subsidiary NorthStar Life Services, LLC, Irvine, California, in 2013, the bank gained direct access to and influence on a reliable, experienced and renowned service provider. Today, in addition to the financing of US Life Settlements, the bank also offers individual services in securities trading and structured finance.