The 16Rock Municipal Opportunities Fund, which is managed by former BlackRock trader James Pruskowski, has delivered a 20% return over the past year, outpacing the muni bond market by 16 percentage points and a broad hedge fund index by 11, according to a report by Bloomberg.
The fund, which imposes a 1% management fee and a 20% performance fee beyond a specific threshold, is on track to close at $100m in investments by the year’s end, according to Pruskowski.
“The municipal bond market is often undervalued and misunderstood,” Pruskowski, the chief investment officer at 16Rock and former head of BlackRock’s municipal bond team, explained. “Investors can leverage market dislocations caused by supply, demand, and public policy while benefiting from the asset class’s stable credit quality and low volatility for consistent returns.”
Pruskowski employs leverage, hedging through short positions, and derivatives to capitalise on price discrepancies between securities. Unlike many hedge fund managers who focus on stock activity or corporate events, he specialises in arbitrage between tax-exempt and taxable municipal bonds.
