Money managers are starting new funds to buy distressed securities tied to the subprime market, InvestmentNews reports.
Others see opportunity in asset-backed securities that are not directly tied to the subprime market but have been devalued because of a lack of confidence in the rating agencies that assign value to them.
Marathon Asset Management LLC of New York introduced a new hedge fund, the Marathon Distressed Subprime Fund, to “capitalise from the fallout and carnage in the subprime-mortgage market with a core investment strategy to opportunistically purchase distressed mortgage related and subprime assets,” according to a letter to investors obtained by sister publication Pensions & Investments.
“The meltdown in the subprime-mortgage market has been absolutely stunning and, given this significant opportunity, Marathon has decided to roll out this fund,” the letter said.
Black Pearl Asset Management LLC of Walnut Creek, Calif., has created a separate-accounts strategy designed to take advantage of short-term opportunities in the asset-backed-securities market. Sources said the firm is also launching a hedge fund, though chief investment officer James Midanek declined to discuss it.