Phoenix Investment Partners, Ltd. is evolving again, teaming up with Arden Asset Management to develop a new hedge fund of funds product. Of interest to asset-backed players, however, is the new animal all but bound to emerge from a partnership between a leading hedge fund of funds manager and a high-performing CDO player like Phoenix (See ASR 6/18/01).
Collateralized debt obligations of equity-related alternative investments seem to be on the priority list of several CDO managers these days. The private equity fund-backed Prime Edge Capital PLC CDO, managed by Capital Dynamics, recently received the first-ever stand-alone credit rating for a private equity vehicle from Standard & Poor's (see ASR 6/11 p. 10). It is likely that several other managers are currently eyeing the structure for their own portfolios.
"At hedge fund conferences there's always a section on CDOs and CBOs," said Don Segalis, executive vice president and chief marketing officer for Phoenix's alternative financial products division. "A trend that's happening right now is to apply CDO-structuring technology to the hedge fund universe we think that this is one of our first steps in that direction."
While a CDO of hedge funds hasn't officially been mandated at Phoenix, according to Segalis, "It's fair to say that as one of the leading issuers of CDOs, we're going to evaluate their implications within the hedge fund industry. As an asset-management firm, we're ahead of the curve here."
With more than $1.7 billion in assets, Arden Asset Management is oriented towards absolute return strategies with low market correlation. It has one of the highest risk-adjusted performance ratings of any hedge fund program.
"We like the hedge fund arena as an asset class, globally, for our institution; that's why we're delivering it to our investors," said Segalis. "We believe that Arden is one of the premier hedge fund of funds companies in terms of manager selection, organizational strength and performance in the absolute return space a space where we see tremendous investor demand. Hedge funds are one of the more dynamic asset classes right now; we're pretty excited about that."