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Ares Management Corporation announced last week that it is buying the remainder of an asset manager called BlueCove, having first acquired a minority interest back in 2023. It’s potentially a big deal — in importance, if not size.
It was easy to miss amid central bank meetings, wildly diverging earnings results, US-China summits and blockbuster bond deals. BlueCove only manages $5.5bn, and the financial terms of the deal weren’t disclosed, so in dollar terms it’s probably small potatoes. Ares already manages about $596bn, so another $5.5bn doesn’t really change things much.
However, it is a telling moment for a fascinating little slice of the fixed income universe that Alphaville is low-key obsessed about — systematic credit investing — so we thought it was worth revisiting. As Kipp deVeer, Ares’ co-president, said in a statement:
In recent years, we have seen increased interest in systematic credit investment products and capabilities from global investors as they seek to diversify their portfolios and capture the opportunities presented by the quantitative credit investment revolution. This demand, paired with a broader structural shift towards systematic fixed income trading to achieve alpha, underlies the latest expansion of our market leading Credit Group.
BlueCove was set up in 2018 by Alex Khein and Hugh Willis — former founders of BlueBay Asset Management, now owned by RBC — with CIO Ben Brodsky poached from BlackRock.
It’s among a small but growing number of investment groups now betting that the quantitative revolution that first began decades ago in equity markets is finally going to play out in the corporate bond market as well. If you want to know more, MainFT ran a “big read” on the topic a few years ago.
Ares’ full acquisition is therefore a good excuse to check in on how far things have come, and whether the numbers have begun to justify some of the hype.
Sadly, we don’t have performance details for BlueCove, but assets have tripled since Ares first acquired a minority stake two years ago, so we assume it’s been at least decent. It will now be renamed Ares Systematic Credit, indicating that the US asset manager is also happy with the results so far (if performance had been dross, Ares presumably would have wanted to downplay the association).
Man Group’s Numeric is another pioneer in the field, and also seems to be finally getting some traction. Here’s a slide from the listed hedge fund group’s last results, which showed that its systematic credit business has more than tripled in size since 2023, to $3.6bn as of the second quarter of 2025 (zoomable version).
Alphaville also reached out to Blackstone, which in 2020 purchased Diversified Credit Investments — another early mover in systematic credit, and one of the largest, with $7.5bn in assets at the time.
DCI has since been rebranded to Blackstone Corporate Bond Strategies, and now manages over $30bn. Adam Dwinells, the unit’s head, said in a statement to Alphaville that Blackstone was also seeing greater traction for what he describes as “a better mousetrap” than many traditional bond investing approaches:
Systematic strategies are still a small percentage of the corporate credit market today, but we have recently seen a significant increase in client interest and expect these strategies 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 to see more firms take quantitative approaches to the market.
In May 2024, Barclays analysts estimated that there were about $90-140bn deployed in various systematic investment strategies in the US corporate bond market. Some very rough napkin maths based on the growth rates of BlueCove, Man and Blackstone (and that is being charitable to napkin maths) would put the broader universe in the $200bn-ish range overall today.
Systematic credit will probably never become as big as its equity market equivalent. Firstly, because a lot of discretionary fixed income investing is fairly quanty anyway, and secondly, because there are huge differences between the two asset classes that will probably always remain there.
However, with bond ETFs, electronic bond trading and systematic credit investing now all growing and reinforcing each other — and increasingly resembling one of those flywheels beloved by consultants — it does feel like we are approaching a breakout moment.
