Hedge fund veteran Phil Duff launches new firm

BOSTON, March 5 (Reuters) - Hedge fund industry veteran Phil Duff, who recently sold FrontPoint Partners to Morgan Stanley, said he launched a new firm to help pension funds, endowments and insurers meet long-term funding obligations.

Armed with $500 million in equity capital from private equity firm Lindsay Goldberg, Duff said on Wednesday that the new company, Duff Capital Advisors, is planning to raise between $1 billion and $1.5 billion to seed investment strategies this spring.

Duff, a former chief financial officer at Morgan Stanley (MS.N), has experience in setting up and growing new companies.

He sold FrontPoint, the hedge fund business he founded with two partners and turned into a $5.5 billion company, to Morgan Stanley in 2006 as big Wall Street firms were snapping up hedge funds to round out their offerings.

His new venture, based in Greenwich, Connecticut, turns its attention to pension funds and others at a time studies show that the majority of America's biggest corporate and public plans are underfunded.

"Organizations with long-term liabilities are finding it increasingly difficult to close their asset/liability gaps given lower return expectations, higher correlations and increased competition." Duff said, adding "We believe a new approach is required to meet those needs."

Duff hired other industry veterans to help, bringing in Eileen Murray, who used to run global finance, operations and technology at Morgan Stanley, as president. Jack Zimmermann, a former FrontPoint partner, will run the new firm's client advisory group and Kevin Becker, a former senior partner at hedge fund SAC Capital Management, will be the chief investment strategist.

Duff Capital Advisors also bought Azimuth Asset Management, including its Fat-Tailed Catastrophic Risk and Asset Allocation System (FaTCat). (Reporting by Svea Herbst-Bayliss; Editing by Steve Orlofsky)