Positioned as absolute-return alternative to core and core-plus strategies. Driehaus Capital Management is pitching an absolute-return mutual fund designed to profit from opportunities in the credit markets to high-net-worth and institutional investors who are looking for an absolute-return alternative to core and core-plus strategies. The Chicago-based separate account and mutual-fund manager says its Active Income Fund is unlike recent launches of "hedge like" mutual funds in that it has a three-year track record, has received a 5-Star Morningstar rating and it already has more than $800 million in assets.

Rapidity

"This fund has the flexibility of a hedge fund, but the advantages of a mutual fund [such as] regulatory oversight, liquidity, transparency and lower costs," says Driehaus' CEO Rob Gordon.

The diversified fund seeks to provide current income and capital appreciation by investing primarily in investment and non-investment grade U.S. fixed-income and floating-rate securities, and by engaging in a variety of short-term trading strategies that can include exposure to equities "to take advantage of the spreads in the market between callable and non-callable debt, between low and high quality credit instruments, between various maturities along the yield curve, and between the short-rate yield differences of different countries, as well as other pricing discrepancies," according to a blurb on Driehaus' website.

Non-investment grade securities are also known as "junk bonds."

Credit markets offer some extraordinary investment opportunities these days, but these opportunities isolated, hard to pin down and constantly shifting, according to K.C. Nelson, who co-manages the Driehaus Active Income Fund with Mirsada Durakovic.

"A static, long-only core approach with no hedging mechanism can fail to take advantage of these changes," says Nelson. "This fund gives investors exposure to the credit markets in a relative value format, while hedging away virtually all of their interest rate risk."

Growth manager Driehaus runs 12 equity strategies in addition to the credit-focused Active Income Fund. It managed about $2.5 billion at the end of March 2009. -FWR

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