OneWorld Investments, a U.S.-based hedge fund manager with USD460 million in assets, has recently launched an emerging markets fund that purchases and sells credit protection on emerging market, high-yield and investment grade credits. The fund, dubbed OneWorld Emerging Macro Fund, has assets of USD26 million, according to Ignacio Sosa, principal and portfolio manager in Boston.
Sosa said the fund manager largely buys and sells credit default swaps and credit derivative indices on emerging markets for both hedging and speculative purposes. It also sometimes pursues relative value trades between high-yield and emerging markets when there are pricing discrepancies.
It also trades options on the indices, but Saso noted that few dealers show prices for options on swaps that reference individual emerging markets. Options on emerging market bonds, by contrast, are liquid. OneWorld selects counterparties for trades from a handful of major dealers, including JPMorgan, Morgan Stanley, Deutsche Bank and Lehman Brothers.
