The Avenue Credit Strategies Fund (ACSAX) debuted on June 1, 2012, and has quickly grown to accumulate more than $2 billion in assets under management. The fund is managed by Avenue Capital, which is known for its notable founder, Marc Lasry. The fund has also performed quite well since its inception: According to Morningstar, a $10,000 investment in the fund at its inception would have grown to more than $13,455 by September 2, 2014. The equivalent amount invested in the Barclays US Aggregate Bond Index would have grown to a mere $10,425.
The Avenue Credit Strategies Fund pursues total return from capital appreciation, fees, and interest income, with a focus on high-yield bonds, senior secured bank loans, and distressed debt from issuers in the U.S., Canada, Europe, and Asia. The fund offers investors access to event-driven strategies with hedged risk management and the potential for higher current yield. Avenue Capital, the fund’s manager, is a firm with approximately 50 distressed credit investment professionals, and a proven track record in the space.
Hedge Funds, Mutual Funds and Basketball
Avenue Capital was founded in 1995 by hedge-fund manager Marc Lasry and his sister. Mr. Lasry, who was born in Morocco and began his career as a bankruptcy lawyer, has been an investment professional for more than 30 years, and he has grown Avenue Capital from a $10 million startup to a $12 billion asset manager. Earlier this year, Lasry purchased the Milwaukee Bucks NBA franchise for $550 million. He is also notable as a major donor to President Barack Obama, and he nearly earned an appointment as U.S. ambassador to France.
Lasry’s unique story and high profile give Avenue Capital brand panache similar to Joel Greenblatt’s Gotham Capital, which was also able to accumulate $2 billion in assets under management in its mutual funds at a similar, rapid pace. With high-net-worth individuals showing increasing preference for liquid alts over hedge funds and other traditional alternative investments, the trend of famous hedge-fund managers offering liquid alts products is likely to continue.
The Avenue Credit Strategies Fund’s Investor class shares have a minimum initial investment of $5,000, and a 1.92% expense ratio. For the 12 months ending August 31, 2014, the fund had generated returns of 10.34%, outperforming the high yield category average of 9.27%. Year-to-date through August 31, the Avenue Credit Strategies Fund ranked in the top 11% of high-yield bond funds.