The fund, which will start with $150 million, will invest in “specialised” credit hedge funds “to get the full return of strategies,” Bernard Sabrier, chairman of the Geneva-based asset manager that oversees about SFr10.5 billion ($9.2 billion), was quoted as saying. The fund is set to make a return of at least 20 per cent a year.

Hedge funds from Harbinger Capital Partners in New York to 3 Degrees Asset Management in Singapore are starting funds to buy troubled loans and bonds on the cheap. Companies worldwide will default on their debt at a peak rate of 14.6 per cent toward the end of this year, Moody’s Investors Service has said.

“The whole aim of this fund is to participate over a three- or four-year cycle through the evolution of the credit space,” Mr Sabrier said in an interview in Singapore. “As the crisis moves on, you will have different types of players and strategies which will work in different times,” he said.

The first stage could include investing in hedge funds that bet on first-lien bank loans as the financial crisis fuels distressed selling, said Mr Sabrier.