Startup Hedge Fund Rhodium Bets On Corporate Bonds

Nov 12 2013 | 10:47am ET

Rhodium Capital, a $30 million hedge fund start-up launched by Bank of America alumnus Iftikhar Ali, is putting its faith in corporate bonds.

Ali, who launched the fund with CEO Jeffrey Tirman and serves as chief investment officer himself, told Reuters he expected November and December to be calmer months for bonds, after yields were pushed up (and prices down) by recent political events in the U.S., including questions surrounding the Fed's bond-buying stimulus program and the battle over the debt-ceiling.

"The stormy summer market caused a correction but now the big scares are out of the way so we see further spread compression from here," Ali, who has produced an average annual return of 16% since 2005, told Reuters.

Ali believes the government may not begin cutting back on its bond purchases for some time to come:

"We need consecutive quarters of robust data and recovery so far has been very delicate. Yellen doesn't want to come in and immediately cause instability. I think it will be pushed back even further," he told Reuters.

Rhodium, which can be up to 50% net long or 50% net short, has started out net long, toward the high-end of its range.


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