London-based alternative investment manager Tycho Capital has launched a new vehicle on its funds platform with Zazove Associates, a Nevada-based manager that specialises in convertible securities management, investing across the credit spectrum and around the globe.
The Tycho Zazove Covertible Arbitrage Fund has launched with c.$60m of investor capital, following strong demand from allocators across the UK and Europe seeking diversified sources of return in a more uncertain market environment. Early investors include wealth managers, family offices and institutional investors.
Convertible bonds are a hybrid instrument; they offer bond-like downside protection and income, with the option to participate in equity upside, aiming for the “best of both worlds”.
The fund seeks to monetise inefficiencies in the volatility structure and pricing of the convertible bond market to generate cash plus 4-5% returns, with volatility in the 2-4% range and very low correlation to other asset classes. Convertible arbitrage typically involves buying a company’s convertible bond while hedging equity exposure by shorting the company’s shares, aiming to profit from mispricings and minimise market risk to deliver stable returns across market cycles.
Founded in 1971, Zazove Associates is one of the longest-standing dedicated managers in the convertible securities space, with $1.9 billion of AUM today. Over more than five decades, Zazove has navigated multiple market cycles, including periods of rising and falling interest rates, credit stress and equity volatility, using its highly disciplined and repeatable approach to deliver equity-like returns with significantly reduced risk.
The new fund marks Tycho Capital’s second fund launch of 2026, following the launch of the Tycho CapeView European Long Short Fund earlier this year.
Georg Reutter, Partner and CEO, Tycho Capital, said: “We are excited to partner with Zazove Associates, a true specialist in convertible investing with a track record spanning over five decades.
“Convertible arbitrage is a strategy we believe is particularly well suited to the current environment, offering the potential for equity-like returns with more defensive characteristics, and the high initial demand we have seen from allocators reinforces this. With continued market volatility creating pricing inefficiencies, we see a compelling opportunity for skilled managers to generate consistent, risk-adjusted returns.”
