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July 27, 2017

EuroHedge publishes a profile of ZIM and the ZSO fund

Jonathan Zenios

Article published by EuroHedge on 27 July 2017.

Former Barclays structured capital team racks up a robust track record with its strategy focusing on the regulatory changes that have impacted the market for bank capital financing since the 2008 global crisis

Since launching in July 2015, the Z Special Opportunities Fund – a financial sector-focused credit hedge fund managed by London-based Z Investment Partners – has notched up an increasingly strong track record with a novel investment strategy based around taking exposure to bank capital affected by the regulatory changes following the 2008 global financial crisis.

Specifically, the fund aims to tap into an investment universe of some €400 billion of subordinated paper, including debt and preferred stock, with the strategy focused primarily on building a leveraged portfolio of bank capital instruments through a range of relative value, soft event and trading strategies.

The continued regulatory upheaval brought about by the 2008 crash – particularly the Basel III capital ratios and liquidity requirements – has led to significant liability management activity among banks.

The far-reaching rule changes have impacted the types and amounts of capital that banks may hold, dramatically altering the make-up of their balance sheets. That has resulted in many opportunities for uncorrelated returns, and is very much the starting point and driving force behind the Z Special Opportunities Fund, according to Jonathan Zenios, founding partner and chairman of Z Investment Partners.

In 2016 – its first full year of trading – the fund posted a 6.83% return, while in 2017 the strategy has built on that performance, gaining 14.57% year-to-date – close to its 15% net-of-fees annual return target.

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