New York Hedge Fund Bets On Crises

Nov 30 2007 | 9:48am ET

One New York-based hedge fund is betting on continuing crises across asset classes and is looking to offer investors, specifically funds of hedge funds, hedging overlays on their portfolios.

New York-based Penso Capital Markets is prepping the Crisis Fund for launch sometime in the first quarter. The new offering will manage a portfolio of investments across equity, fixed-income, commodity and foreign-exchange markets. As its name implies, the fund expects its best returns to come in market crisis scenarios, with lower and possibly negative returns in benign and bullish times, according to fund documents.

Co-portfolio manager Steve Gross said the fund is an extension of what the firm has been doing in managed accounts for its existing clients. “We wanted to create this vehicle for groups not large enough for managed accounts or are trying to make a bet on what will happen in the world,” he said. “We try to identify what the risks are in the coming periods and we look for specific ways we can hedge those risks or profit from those events.” 

The new fund will be added to the firm’s Select Opportunities platform, a collection of macro event-driven strategies, as a new share class. Gross expects to see more opportunities in the foreign exchange space as volatility rises for the dollar in the next 12 to 18 months as well as in the real estate market and corporate credit.

“If we do go into a recession next year, which is looking more likely, there will be an increase in corporate credit defaults.”

The Crisis Fund, which  Gross co-manages with Penso’s managing principal, Ari Bergmann, charges a 2% management and 15% performance fee with a high-water mark and a one-year lockup period.

The firm manages $200 million in funds of funds, in addition to monies it manages in seperate accounts.


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