Generation Jobless: What Hedge Funds Can Teach College Students

Matt Wirz:

Ask hedge fund manager Daniel Ades about the future for recent college graduates and he likes to draw a picture, a very ugly picture. He sketches out a bell curve mapping the historical default rate on student loans - then he draws another curve much higher to show the likely default rate for the Class of 2011.

Mr. Ades has become an expert in the $242 billion market for bonds backed by bundles of student loans, delivering consistently strong returns by trading hundreds of millions of dollars worth of the debt over the past four years. "We know all these deals inside out and we know their default rates," he said.

But when it comes to the loans banks made to students who graduated in 2010 and 2011, the 31-year-old investor is steering well clear, "because we can't quantify the risk," he said.

Posted by Jim Zellmer at November 13, 2011 1:46 AM
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