Alpinum's 2026: Navigating a Higher-Nominal World with Credit and Absolute Return

The investment environment has fundamentally reset. The era of persistently low inflation and ultra-cheap money is over. We are now in a higher nominal world, where the equilibrium for inflation and interest rates is entrenched by powerful structural forces. This isn't a cyclical blip but a new baseline, driven by persistent fiscal deficits, rising protectionism, and competitive currency devaluations. For investors, this shift demands a new strategy.

The resilience of global activity in 2025 was the first signal of this new normal. Despite renewed tariff pressures and geopolitical tensions, the world economy held up. This constructive backdrop delivered strong, multi-asset returns. Global equities posted solid double-digit gains, a clear market signal that risk assets can thrive even in a noisy policy environment. Duration also benefited, supported by a synchronised peak in policy rates. Meanwhile, a weaker dollar provided a tailwind for gold and non-US risk assets. The bottom line is that a severe recession remains unlikely, preserving a positive bias on risky assets.

This environment makes an absolute return strategy the logical choice over traditional relative value approaches. In a higher nominal world, the primary goal shifts from beating a benchmark to preserving capital while capturing alpha in a volatile, high-dispersion market. The evidence supports this tilt. Credit investments, particularly loans and non-cyclical short-term high-yield bonds, have become a preferred holding, offering 7–9% yields. These returns are a direct response to the higher cost of capital and the need for income in a world where real yields are no longer negative.

The structural shift is clear. Fiscal and trade policies have raised the floor for inflation and rates. Global activity has proven resilient enough to support equities. And the resulting volatility and dispersion create the very conditions where active management can add value. For investors, the edge is no longer in passive indexing but in navigating this new, higher-nominal reality with a focus on capital preservation and opportunistic positioning.

The Credit Imperative: Yield, Duration, and Default

For investors seeking a reliable income stream in a volatile market, the credit universe offers a compelling alternative to traditional fixed-income. The thesis is straightforward: by moving beyond the crowded high-yield bond market, investors can access superior risk-adjusted returns through senior secured loans and short-duration instruments. This strategy is built on three pillars: superior asset selection, tapping into market inefficiencies, and mitigating the key risk of low recovery rates.

First, the asset class itself must be chosen with care. The preference is for senior secured loans over traditional high-yield bonds. This is not a minor distinction; it is a structural advantage. Loans are backed by collateral and rank ahead of unsecured debt in bankruptcy, which translates to superior default statistics. More critically, they are typically priced with floating-rate coupons. This mechanism immunity to duration risk means their value is not hammered by rising interest rates, unlike fixed-rate bonds.

The historical performance of this asset class underscores the payoff: the S&P US Loan Index has delivered a total return of ~5% p.a. over the long term, providing a stable yield foundation.

Second, the credit universe is far deeper than the headline high-yield bond market. Investors can capitalize on a wide variety of income streams beyond public bonds. This includes illiquidity premiums for less traded instruments or private debt loans, where the lack of daily pricing creates opportunities for skilled managers. It also includes complexity premiums in the structured credit market, where the intricacies of tranches and cash flows can be exploited by those with deep expertise. The universe is not static; it evolves, with niche markets and inefficient pricing emerging. This depth allows for portfolio construction that is not just about yield, but about accessing specific, hard-to-reach sources of return.

The third pillar addresses the core vulnerability of credit investing: low default recoveries. When a company fails, bondholders often recover only a fraction of their principal. This risk is being mitigated by a powerful new tool: Liability Management Exercises (LMEs). The rise of covenant-lite structures has empowered issuers to restructure debt through exchanges, often offering bondholders reduced-value securities for existing bonds. This process, known as a distressed exchange, helps ease financial distress and avoid an outright default. The impact is significant; in 2024, over half of recoveries are expected from distressed exchanges. For investors, this means the recovery tail is being lengthened by active management, turning a potential loss into a managed transition.

The bottom line is a multi-layered approach to credit. It starts with selecting the right asset class-floating-rate loans for yield and resilience. It expands into the broader universe to capture illiquidity and complexity premiums. And it incorporates sophisticated risk management through an understanding of modern debt restructuring. The result is a portfolio designed for constant, efficient yield generation, with a built-in mechanism to soften the blow when defaults inevitably occur.

Portfolio Execution: Absolute Return and Risk Discipline

Alpinum's investment framework transforms a macro-credit thesis into a tangible, risk-managed portfolio through a disciplined, multi-layered approach. The firm's ~USD 2 billion asset base is not a passive collection of assets but a dynamically managed model built on three core pillars: an absolute return mandate, a sophisticated multi-manager selection process, and a constant, opportunistic search for risk premia.

The first pillar is the absolute return mandate, which is validated by performance. The Alpinum Alternative Investment Strategy is up YTD +3.2%. This figure is not a simple market beta play. It is the result of selective allocations to differentiating, defensive, and low-correlation strategies like global macro and arbitrage. This performance demonstrates the strategy's core function: providing diversification in troubled times without being sidelined in positive markets. It is a building block designed to stabilize a portfolio, not chase momentum.

The second pillar is the multi-manager approach, which actively selects among the world's best portfolio managers. This is not a passive indexing strategy. Alpinum believes that no single manager excels at all times. Instead, the firm's team of professionals performs portfolio management, risk control, and active monitoring in-house, using a modular platform to combine in-house and third-party offerings. This allows them to construct a sophisticated model portfolio that aligns with a defined risk budget. The goal is to leverage deep investment expertise and decades of portfolio management experience to create a composite that is greater than the sum of its parts.

The third pillar is the constant, opportunistic search for attractive risk premia. As Chief Investment Officer Reto Ineichen states, the firm is constantly and opportunistically looking for the best possible source of return in line with the pre-defined risk budget. This disciplined hunt for diversification is designed to provide resilience when markets turn. It is a framework built for the current environment, where the firm's absolute return philosophy and draw down risk management is in full effect. The bottom line is that Alpinum's product suite is engineered to deliver on its promise: to provide a risk-managed, absolute return solution that participates in positive markets while actively mitigating losses during stress.