Matrix Group says its recently launched asset-based Fund 2, a fund of hedge funds, has held up well during the credit crunch because it invests in asset-based lending managers and avoids asset-backed securities.
The fund, which invests in a hedge fund portfolio managed by Stillwater Capital Partners, rose by 0.64 per cent in August and 1 per cent in September.
Matrix says the outlook for asset-based lenders is stable because the loans they make to small and medium-sized companies are secured against their assets, which have a higher value than the loan. It says the only variable factor is the interest payments on the loan.
Fund 2 can invest in asset-backed securities, which are tradable on secondary markets, but Stillwater is avoiding this area as it is unsure whether the impact of the credit crunch has further to go.
Matrix managing director Bridget Guerin says: “Until July and August, asset-backed securities had been trading as if the assets were on a par but when the credit crunch came, everyone was trying to sell them. Prices were being marked down whether the collateral was terrible or gold-plated. A lot of hedge fund managers are saying there is cheap paper out there but the question is whether it is going to get cheaper.”