Hedge Funds

Is the subprime trade over?


With some triple-B tranches of the ABX Index now trading in the low 20s, is the subprime trade winding down?

As early as July, John Paulson's Paulson & Co., which has made a fortune this year by shorting subprime mortgages, decided that initiating new short bets in the subprime market had become less attractive.

The firm in July launched Paulson Credit Opportunities III, its third in a series of funds dedicated to shorting mortgages, only to shut the fund down later the same month and give investors the opportunity to redeem or be rolled into Paulson Credit Opportunities