Investment group Ashton Advisors has partnered with Paulson & Co., the US manager famous for its huge returns after shorting sub-prime mortgages, to offer three ‘recovery’ funds to Australian institutions.
Ashton is in the final stages of writing product disclosure statements for the three Paulson funds, which pursue recovery, or distressed, investment themes and are offered in offshore markets. One fund invests in financial institutions requiring recapitalisation, while another targets distressed mortgages, distressed debt and company debt restructurings, and another runs an event-driven strategy.
Nick Raphaely, Ashton managing director, expected the funds to “participate in the recovery of a range of asset different classes”.
Paulson has limited the amount that Australian institutions can invest in the fund overall, Cesar Farfan, Ashton head of distribution in Australia and New Zealand, said.
The funds were launched in offshore markets in October 2008 and have drawn $750 million from investors so far, Farfan said.
In 2008, Paulson funds returned between 6 and 38 per cent. The manager gained notoriety after reaping big returns from shorting the US subprime mortgage securities in 2007.
The funds will be structured as wholesale Australian unit trusts, are moderately leveraged and will be fully hedged to Australian dollars.