Brevan Howard Buying CMBS Sees 60% Gains for Teachers: Mortgages

Brevan Howard Asset Management LLP is seeking returns of as much as 60 percent within two years by buying some of the riskiest commercial mortgage backed securities as Europe’s debt crisis pushes down prices.

The $36 billion investment firm is purchasing bonds created during the real-estate boom leading up to 2007, according to people with knowledge of the strategy, who declined to be identified because it’s private. Brevan Howard created a CMBS fund that may be as large as $1 billion, probably lasting through 2014, and will return 20 percent to 60 percent, the Pennsylvania Public School Employees’ Retirement System said in an April memorandum on its website, recommending a $200 million investment with the hedge-fund manager.