Ex-Countrywide Exec. Preps Global Macro Hedge Fund

Apr 1 2008 | 2:00am ET

A former executive at Countrywide Financial Corp., whose leaders have been lambasted for contributing to the ongoing mortgage crisis, has launched a global macro hedge fund shop with a twist.

Susan Estes formed Zetian Capital, which specializes in long/short global fixed-income products, in February. However, the firm's first fund will not invest in illiquid credit markets.

“The fund will not invest in the credit space and will be focused on the most liquid products, so if it does not have a mark available, or if there’s no price available, we will not trade it,” said Estes. “We will be trading equity futures, but 80% of the fund will be focused on global fixed-income.’

She is currently marketing the firm's first hedge fund vehicle, which is set to launch in September, to funds of hedge funds, private equity firms and large-scale investors.

Estes, who believes that there is tremendous market opportunity right now because of shifts made by the Federal Reserve, said the market creates opportunities for any fund not impaired by what has gone on in the credit crisis, with liquid products proving very attractive for a lot of investors.

Estes stressed that her past association with Countrywide should not hinder her fund raising efforts.

“I was hired by Countrywide to set up the company’s non-mortgage trading businesses, so my focus was not on anything that’s been in the press,” she said.

Estes was most recently a managing director in the capital markets division at Countrywide. She launched several non-mortgage rates trading businesses since joining the firm five years ago, including the primary dealership, futures introducing broker and derivative products subsidiary.

“It was unfortunate that we were in a position where we could’ve helped the capital markets [group], but there was a liquidity issue at Countrywide,” she said. “So I’m not concerned about the stigma at all because mortgage credit is not where the fund is going and that’s where my reputation is founded.”

Estes has also served as head of fixed income North America for Deutsche Bank and global head of U.S. Treasury and Agency trading at Morgan Stanley.

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