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Former JPMorgan Credit Chief Eyes USD250M Venture

Andrew Feldstein, former managing director and co-head of North American structured products and derivatives marketing at JPMorgan in New York, is readying the launch of a credit hedge fund in June. The fund, which is yet to be named, reportedly will launch with assets of USD50 million and is predicted to grow to USD250 million by year-end. It will trade over-the-counter credit derivatives and adopt several credit arbitrage strategies, as well as invest in structured credit products. Feldstein confirmed his plans to launch a fund, but declined further comment.

Feldstein left JPMorgan in February and is in talks with potential backers, including JPMorgan, said the official. Brian Marchiony, spokesman at JPMorgan in New York, declined comment. The fund has not picked a prime broker, but may favor firms that are prepared to invest. An additional three fund managers are expected to join Feldstein in the coming weeks, the official noted.

Feldstein has a strong reputation in the credit derivatives arena and was instrumental in the growth of JPMorgan's credit derivatives business, noted one credit professional at a competing firm. Another official agreed Feldstein has a unique background, having worked in various fixed income and credit derivatives roles, which will stand him in good stead for the venture.

The launch will evaluate several opportunities on single name credits and will make basis trades, which seek to exploit inefficiencies between pricing on the same name across instruments, as well as relative value trades, said the official. In addition, the fund will invest in structured vehicles, including synthetic collateralized debt obligations and first-to-default baskets, he added. To begin, the fund strategy is expected to be skewed two-thirds toward single name trades, and one-third toward structured instruments.

Marchiony declined comment on whether Feldstein will be replaced. Chris Harvey, managing director, is the other co-head of the division. Harvey did not return calls.

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