Aon Gets Opportunistic in Credit

Aon’s investment consulting and OCIO unit has raised $349.9 million for an opportunistic credit strategy, the Chicago-based firm announced Tuesday.

The multi-manager fund, offered as part of Aon Investments USA’s outsourced-CIO platform, is “short- to medium-term” and “flexible” strategy that will target exposures to public credit, stressed credit, and real estate debt, according to the announcement. Russ Invinjack, a senior partner at the firm, said that Aon decided to develop the strategy “right in the midst of March as we saw the dislocation going on and the credit spreads.”

“It goes back to the great financial crisis,” he told Institutional Investor Tuesday. “We noticed that because of the demands on clients’ time that investing in numerous managers and deploying capital in a somewhat expedited manner was difficult.”

This time, he added, “we wanted to look to offense because we knew there would be opportunities that would come back.”

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Aon currently offers its OCIO clients a number of funds-of-funds across asset classes including public equities and fixed income. But the new fund is the first opportunistic credit strategy that Aon has offered, according to Invinjack. It is also more illiquid than the firm’s other vehicles.

“This was an opportunity that we saw to meet clients’ return needs,” he said, noting that investors will be “lucky to get a percentage point from U.S. Treasuries” going forward.

Credit strategies targeted by the fund will include “liquidity-driven dislocations” in leveraged loans, high-yield bonds, collateralized loan obligations, and asset-backed securities, as well as stressed and distressed credit and real estate credit. 

“We’re targeting managers that have the expertise to take advantage of mispricings in the credit markets,” he said. “We’re hoping for attractive risk-adjusted returns going forward.”