Paulson Scores on Credit

Chidem Kurdas

Paulson and Co.’s flagship credit opportunities fund made 15.6% in the 12 months through this July, emerging as one of the better investments in this strategy.

Apparently the gains from defaulted debt more than compensated for losses due to interest rates rising in expectation of the Federal Reserve’s tapering off its bond purchases. The fund has invested in mortgage securities, bank debt, convertibles and other debt.

The past couple of years have been far from smooth sailing for John Paulson, whose losses from gold were often in the news this year. The credit fund, too, went into the red in June, but despite that the year-to-date return is 11.7%.

Meanwhile, mass exodus from bond mutual funds continues, with money coming out of municipal bonds as well as corporate bonds.

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Tags: Debt, John Paulson