A successful systematic credit strategy is not just about predicting returns. It equally relies on accurately forecasting the associated risks and, crucially, the transaction costs, described as avoiding giving a 'liver and a kidney to Goldman Sachs.'

Contrary to intuition, even a fully systematic, rules-based investment strategy benefits from an active ETF structure. This approach avoids third-party index licensing fees and provides crucial flexibility to delay rebalancing during volatile market events, a cumbersome process for index-based funds.

Contrary to marketing narratives, Acadian Asset Management's analysis finds no evidence that private credit generates higher risk-adjusted returns than public credit. Analysis of private issuers within public indices shows they are simply riskier firms with higher yields to compensate, not a source of alpha.

In the early 2000s, when hedge funds operated like opaque family offices, Frontpoint Partners gained an edge by providing institutional-grade transparency. They offered detailed reporting on holdings, risk contributions, and processes, making institutions comfortable by speaking their language and demystifying the alternative investment 'black box'.

Unlike discretionary managers with narrow focus, a systematic process has a view on every bond continuously. This allows it to act as a liquidity provider—trading opportunistically when others are forced to transact—and capture implementation alpha, effectively being 'paid to trade.'

While client education is important, Goldman Sachs identifies financial advisors as the primary bottleneck for growth. Many advisors outside the ultra-high-net-worth space lack knowledge on alternatives, making comprehensive advisor education paramount for broader market penetration and successful product distribution.

The common practice of bifurcating credit portfolios into 'investment grade' and 'high yield' is an artifact of historical benchmarks and institutional mandates, not an economically optimal approach. A purely systematic view would blend them based on risk characteristics.

While active equity funds often fail to beat benchmarks, active management in fixed income tells a different story. Allspring CEO Kate Burke notes over 90% of their active bond strategies outperform over multiple time horizons, attributing this success to deep, proprietary credit research.

While limited partners in venture funds often claim to seek differentiated strategies, in reality, they prefer minor deviations from established models. They want the comfort of the familiar with a slight "alpha" twist, making it difficult for managers with genuinely unconventional approaches to raise institutional capital.