BlueMountain launches new credit fund, reports FINalternatives

FINalternatives reports that BlueMountain Capital Management is in the market with another credit-focused hedge fund. The Correlation Relative Value II Fund comes two months after BlueMountain’s Defensive Credit Fund and has launched with $80 million in investor capital. The article notes the fund was immediately closed to new investments.

The fund, designed to capitalise on opportunities in structured corporate credit markets, is BlueMountain’s third long-term closed-end fund devoted to credit correlation trading, following the Timberline fund (up 35% year-to-date and 65% since inception) and CRV I (up 34% annualised over its 20-month life).

The article says CRV II features a six-and-a-half year lock-up, but will unwind its positions after the “trading opportunities presented by the current market volatility have ebbed, as it did with CRV I,” according to BlueMountain. The article points out that CRV I, launched during the height of the 2005 dislocation in the credit correlation market, also had the same lockup period, but unwound its positions and returned profits and capital to its investors after just 20 months, delivering 56% returns over the period.