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July 31, 2019  

Credit Manager Phase3 Preps Volatility Fund

Phase3 Capital, founded last year by a former Citadel portfolio manager, is launching a second strategy.

The Glenview, Ill., firm, led by Ethan Youderian, plans to begin trading a credit-volatility vehicle later in the third quarter. Phase3’s flagship fund pursues a mix of credit-focused strategies including relative value and volatility.

The new fund will target investments that are too complex for many traders and too small for big alternative-investment managers. While details about the strategy are sketchy, it appears the fund will seek to profit primarily from low credit-market volatility.

The fund-raising effort will be led by business-development staffer Devin Carter and portfolio manager Shane Hoover, who both previously worked with Youderian at PT Asset Management.

Youderian formed Phase3 in April 2018 and began trading in July. At yearend, the firm was running $900 million of gross assets.

Youderian joined Citadel early on, managing convertible-arbitrage portfolios from 1994 to 2004. Most recently, he served as chief investment officer at PT, an asset-management affiliate of Chicago investment bank Performance Trust Capital.

In addition to Hoover, Youderian’s investment team includes portfolio manager Karim Alwan and analyst Jeff Krause, who also previously worked at PT. Phase3 currently is interviewing several analysts to support its new volatility fund.

The firm’s chief financial officer is Eric White, who joined in June from UBS O’Connor. White, who also holds the title of chief compliance officer, was head of asset valuation for UBS’s quantitative hedge fund unit.