Unlock Editor’s Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
Ares Management Corp. announced last week that it will acquire the remainder of an asset management company called Blue Cove, from which it acquired its first minority stake in 2023. This could potentially be a big deal in terms of significance, if not size.
Amid central bank meetings, wildly divergent financial results, a U.S.-China summit, and a massive bond trade, the event was easy to overlook. Blue Cove only manages $5.5 billion, and the financial terms of the deal were not disclosed, so it’s likely small potatoes in dollar terms. Ares already has about $596 billion under management, so an additional $5.5 billion won’t change things much.
But we thought it was worth revisiting because it’s a moment that speaks to a fascinating little part of the fixed income world that Alphaville is modestly obsessed with: systematic credit investing. Kip DeVere, co-president of Ares, said in a statement:
In recent years, systematic credit investment products and capabilities have seen increased interest from global investors looking to diversify their portfolios and capture the opportunities presented by the quantitative credit investing revolution. This demand, coupled with broader structural changes to systematic fixed income trading to achieve alpha, has been the basis for the recent expansion of our market-leading credit group.
Blue Cove was founded in 2018 by Alex Cain and Hugh Willis, former founders of BlueBay Asset Management, now part of RBC, and its CIO is Ben Brodsky, who was hired from BlackRock.
A small but growing group of investors is betting that the quantitative revolution that first began in stock markets decades ago will eventually occur in corporate bond markets. If you’d like to learn more, MainFT did a “big read” on this topic a few years ago.
So the full acquisition of Ares is a good excuse to see how far things are going and whether the numbers are starting to justify some of the hype.
Unfortunately, we don’t have details on BlueCove’s performance, but its assets have tripled since Ares first took a minority stake two years ago, so we think it’s at least decent. The U.S. asset manager, which will now be renamed Ares Systematic Credit, has also indicated it is satisfied with the results so far (had it not performed well, Ares would likely have wanted to downplay the association).
Man Group’s Numeric was also a pioneer in this space, and it too seems to be finally gaining momentum. This is a slide from the publicly traded hedge fund group’s latest earnings showing that the size of its systematic credit business has more than tripled since 2023, to $3.6 billion as of Q2 2025 (zoomable version).
Alphaville also reached out to Blackstone, which acquired Diversified Credit Investments in 2020. The company was another pioneer in systematic credit and one of the largest at the time, with assets of $7.5 billion.
DCI has since rebranded to Blackstone Corporate Bond Strategies and now manages more than $30 billion. Adam Dwinells, head of the division, said in a statement to Alphaville that Blackstone is also focusing heavily on what he describes as a “better mousetrap” than many traditional fixed income investment approaches.
Currently, systematic strategies still represent a small proportion of the corporate credit market, but customer interest has increased significantly recently and these strategies are expected to grow steadily in the coming years.
As the corporate bond market continues to evolve with advances in trading protocols and data availability, we expect more companies to take a quantitative approach to the market.
In May 2024, Barclays analysts estimated that approximately $90 billion to $140 billion was being invested in various systematic investment strategies in the U.S. corporate bond market. A very rough napkin calculation based on Blue Cove, Mann, and Blackstone’s growth rates (and that’s a charity call to the napkin calculation) would put the overall size of the wider universe today at around $200 billion.
Systemic trust will probably never be large enough to rival the stock market. Firstly, because many discretionary bond investments require significant amounts anyway, and secondly, because there is, and probably always will be, a big difference between the two asset classes.
But now, as fixed income ETFs, electronic fixed income trading, and systematic credit investing are all growing and reinforcing each other, increasingly resembling one of consultants’ favorite flywheels, it feels like a breakout moment is near.
