Long-time ABS investment house Structured Finance Advisors (SFA) is moving away from the "flawed models" of the CDO market and will soon launch a new investment find - dubbed the SFA Managed Account Program - which SFA President and founder Joe Lorusso is pitching as "the anti-CDO product." The target launch date for the fund is 4Q03.
"The CDO formula is faulty," Lorusso said. "We can see now, that from the start, the model was doomed for failure." Instead of collecting fees for its collateral manager role, SFA will be compensated with a flat-rate base management fee and quarterly performance bonuses, essentially an incentive clause based on agreed-upon performance triggers.