Who we are
Core Markets is an Investment Advisor which seeks to deliver strong expected returns combined with downside protection in simple, low-cost, liquid and transparent investment products.
Credit as an asset class
Investors are consistently paid too much for providing insurance against credit default. On a buy-and-hold basis, fixed term credit exposure has paid investors an excess return, almost irrespective of when that exposure is first taken. Core Market Strategies seeks to monetise this insight, delivering enhanced market returns to investors with a high degree of downside protection, using rules-based investment strategies.
Most active managers underperform a comparable benchmark or simply deliver disguised beta
Using a manager to buy low and sell high and paying high fees in the process has not worked for most investors.
S&P Indices, a global index provider who are the authors of the S&P 500 & Dow Jones Industrial Average indices, have issued an annual scorecard called S&P Indices Versus Active or “SPIVA” since 2001. S&P monitors a wide range of actively managed funds across many markets, geographies and investment styles and compares their performance against a suitable benchmark index for different time periods. This study is available on their website.
“There is a widely held belief that active portfolio management can be most effective in less efficient markets, such as emerging market equities, as these markets can provide managers the opportunity to exploit perceived mispricing. However, this view was not substantiated by our research, as over 70% of active funds underperformed their benchmarks across all observed time horizons.”
SPIVA Europe Scorecard Year-End 2015, page 2
Rules-based investing does not seek to deliver “alpha”.
Instead we seek to apply a simple and robust set of risk and trading rules that reliably capture an enhanced market return.
An important advantage of adopting this approach is operational efficiency, keeping costs low and allowing investors to compound the vast majority of returns.
Our Investment approach
We take a systematic and research-led approach to identifying value. An idea is only developed into an investment strategy if certain criteria are met:
- Drivers of an opportunity are clear and persistent
- The opportunity can be captured in a few simple rules
- The strategy can be rigorously tested in both the original market and across other unrelated markets
- When tested against other markets the strategy has broadly similar risk and performance characteristics to that shown in their original market
- Each strategy is liquid and scaleable
Our enhanced market return strategies should fit well with an investor seeking
- a broad allocation to credit, or
- a "Core - Satelite" investment strategy, holding some of their portfolio in alpha-seeking active managers and the rest of their portfolio in liquid core exposures.
What we are not
The strategies that Core Markets advise on are not active, credit-picking and high-cost.
Instead we seek to deliver enhanced market returns and low-cost access to core credit markets that are liquid, diversified and where investors are given a high degree of downside protection.
Our strategy offers daily liquidity with no charges or limits to redemption and they are available as UCITS.