Swedish alternative credit specialist Ymer SC AB has officially launched its fourth fund, the Ymer European Structured Credit Fund IV, which is now listed on the Nordic Growth Market. Building on the strong performance of its predecessor vehicles, the new fund continues to target attractive relative value opportunities in the European Collateralized Loan Obligation (CLO) market.

“We are pleased to announce that Ymer’s fourth fund has been officially launched and is now listed on NGM,” announces Stefan Engstrand, co-founder and CEO of Ymer SC AB. “Fund IV follows the same proven strategy we introduced with our first fund in 2018, which has delivered strong results across different credit cycles and market environments,” he continues. “We are proud of what we have achieved together, including the performance of Fund II, which is scheduled for redemption next year after doubling investor capital over its five-year term. We continue on our established course, steady and unchanged, like our namesake, the icebreaker.”

“We are pleased to announce that Ymer’s fourth fund has been officially launched and is now listed on NGM.”

Stefan Engstrand, co-founder and CEO of Ymer SC AB.

CLOs pool portfolios of corporate loans into tranches with varying levels of risk and return, making them attractive to investors across the risk spectrum. “Alternative credit markets such as CLOs generally offer higher returns than more liquid credit investments, like corporate bonds, due to their somewhat higher complexity and lower liquidity,” Engstrand previously told HedgeNordic. He stresses that the opportunity in CLOs is structural rather than cyclical. “Investors that can take a long-term view and lock their capital will be better positioned to capture the yield pick-up available in our market,” he noted, a key reason Ymer has structured its fourth fund as a closed-ended vehicle targeted at institutional investors.

To capitalize on these opportunities, managers must determine where in the CLO capital structure – equity, mezzanine, or senior debt – the most attractive risk-adjusted returns can be found at any given time. “We have continuously been able to find attractive relative value in securitized markets and CLOs in particular. The question is where in the CLO capital structure that value is located at different points in time,” said Engstrand.

“We have continuously been able to find attractive relative value in securitized markets and CLOs in particular. The question is where in the CLO capital structure that value is located at different points in time.”

Stefan Engstrand, co-founder and CEO of Ymer SC AB.

The market Ymer operates in can be both volatile and illiquid, two factors that contribute to the return premium over traditional credit markets. Managing these dynamics requires patient capital. “To benefit from this volatility and avoid being forced sellers at the wrong time, we structure our funds with a five-year lock-up,” Engstrand explained earlier this year when announcing the launch. “This has been important historically and has allowed our funds to deploy capital during periods of market stress, such as during the Covid crisis or the 2022 sell-off.”