Guggenheim Unveils Mortgage Hedge Fund

Jan 5 2009 | 9:39am ET

Guggenheim Partners, a $100 billion asset management firm, has launched a mortgage hedge fund to exploit opportunities in the real estate and commercial mortgage sectors.

The firm’s $233 million Opportunistic Investment Grade Securities Fund made its debut in October and is up 8.2% in its first two months of trading. 

The fund will invest primarily in performing and non-performing real estate assets, including mortgage loans, mortgage-backed securities and asset-backed securities. It will also invest in other securities, including collateralized obligations and derivatives.

The firm said it believes that the recent volatility in the credit market has created numerous dislocations and that more are likely to occur as the excesses of the past few years are unwound. It also believes that high quality assets will be sold by many investors due to capital needs, margin calls or forced liquidations and the fund will seek to take advantage of these opportunities as they arise.

The fund charges a 1% management fee and a 10% incentive fee with a $25 million minimum investment requirement.

Guggenheim’s current business lines include asset management, investment advisory, capital markets, institutional finance, and merchant banking.

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