BOSTON, Feb 5 (Reuters) - Och-Ziff Capital Management has long been mum about its $17 billion credit business but on Thursday the publicly-traded hedge fund firm disclosed data about returns and assets for the first-time ever in this fast growing segment that analysts were eager to see.
The $47.5 billion hedge fund said it managed $10.3 billion in its dedicated credit funds at the end of 2014. That marks a 49 percent increase in assets for the portfolios that are stocked with distressed corporate, structured and private debt from around the world. James Levin is the head of global credit.
Och-Ziff also has $7 billion of credit investments in its multi-strategy funds.
As with most hedge funds, Och-Ziff has said little about which portfolios make money and how they do it. Analysts, who cover the company, said they welcome the extra information because it helps them to better value the business.
Assets are split nearly evenly between the firm’s opportunistic credit funds and its Institutional Credit Strategies which invest in leveraged loans, high-yield bonds, and collateralized loan obligations (CLOs). Akhil Mago runs U.S. structured credit while Brett Klein oversees U.S. corporate credit. Don Young oversees the performing credit business.
Big-name investors, including state pension funds and foreign governments, have long flocked to Och-Ziff for steady and safe investments with company chief executive Daniel Och telling analysts every quarter that interest in the credit offerings was strong. On Thursday, he said just how strong.
Assets in the Institutional Credit Strategies, for example, nearly doubled last year, thanks to inflows of $2.6 billion during the fourth quarter. These went mainly into four CLOs that closed in 2014. In total the company managed nine CLOs.
Overall, the credit products pulled in the most new money with just $800 million in new money going into Och-Ziff’s multi-strategy funds and $1.5 billion going into real estate funds.
Och-Ziff managers turned more cautious last year and cut exposures, avoiding losses in the energy and shipping sectors plus financial service companies created by the U.S. government including Fannie Mae and Freddie Mac. Collateralized debt obligations and mortgage restructurings helped performance.
The OZ Credit Opportunities Master Fund, launched in 2011, gained 8.9 percent last year while the company’s flagship OZ Master Fund gained only 5.5 percent. Over its lifetime, the OZ Credit Opportunities Master Fund has returned an average 18 percent a year.
Reporting by Svea Herbst-Bayliss; Editing by Diane Craft