3iDM US focuses on investing in non-investment grade corporate credit, primarily bank loans, through a variety of investment vehicles, including private funds and collateralized loan obligations (CLOs). 3iDM US was formed to provide fundamental credit analysis, fixed income investment advisory and management services.
3iDM US is an indirect subsidiary of 3i Group plc (“3i Group”) and is US investment management platform of 3i Debt Management. 3i Group is a leading international investor focused on private equity, infrastructure and debt management across Europe, Asia and the Americas. 3i Debt Management specializes in the management of third-party funds investing in non-investment grade corporate credit issued by medium and large European and US companies. 3iDM US was established when the entire Fraser Sullivan Investment Management (“FSIM”) team, founded by John Fraser and Tighe Sullivan in 2005, joined 3iDM US on September 28, 2012. The team continues to employ the same successful strategy at 3iDM US. Since the inception of FSIM, the team has increased the AUM from zero to $3.8 billion (as at March 2014) and has been an active participant in the bank loan market as one of the most active issuers of Collateralized Loan Obligations (CLOs) and the advisor to an actively managed long-only fund (3i US Senior Loan Fund).
The Firm’s investment strategy across all of its products is to generate strong risk-adjusted returns through emphasis on principal preservation, yield capture, and error avoidance. Outperformance is generated though strict adherence to a rigorous, bottom up investment process that produces a diversified, total return focused portfolio, while constantly seeking to avoid downside risk. The process consists of continually debating the credit worthiness and the relative value of the investments in the portfolio, staying aware of, but not focused on the benchmark (for Fund’s with benchmarks), and always being vigilant of the asymmetric risk inherent in the non-investment grade asset class.
The experienced 3iDM US team employs a rigorous due diligence process to focus on finding credits with sustainable cash flow, solid asset coverage, and downside protection. The Portfolio Managers construct the portfolio from the bottom up to create a diversified portfolio that is independent of any benchmark index. The portfolio construction process consists of evaluating the best risk-adjusted total return opportunities using a relative value approach. Portfolios will not be constructed by overweighting or underweighting issues to compare to an index; nor will they be constructed to “reach for yield” when the yield is not commensurate with the credit risk. By focusing on protecting against downside risk, the Portfolio Managers are able to quickly evaluate and respond to potential changes in the performance or trading prices of portfolio holdings in order to limit risk and trading losses.