Saba Hedge Funds Focused on Closed-End Credit Suffer 2018 Losses

(Bloomberg) -- Boaz Weinstein’s hedge funds that invest in closed-end credit strategies have posted losses this year.

The market-neutral Saba Capital CEF Opportunities 2 dropped about 7.5 percent in the first seven months of the year and fell 2.6 percent in July, according to an investor letter seen by Bloomberg News. The long-only Saba Capital CEF Opportunities 1 rose 1.5 percent in July and declined 2.6 percent for the year.

Saba Capital Management, which manages about $1.4 billion, has historically made money in its main fund exploiting the price differences of related credit securities. The two smaller funds, which together manage $400 million, target closed-end funds that trade at discounts to their net asset value and invest mostly in high-yield bonds and loans.

Hedge funds on average returned 1.6 percent this year through last month on an asset-weighted basis, according to Hedge Fund Research Inc. The iShares iBoxx High Yield Corporate Bond ETF was up 1.2 percent with dividends reinvested.

Last year, the Saba market-neutral fund was up 11 percent, while the long-only pool rose about 22 percent. A spokesman for New York-based Saba Capital declined to comment.

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