FORTUNE — While some of the largest and most prominent hedge funds reeled in August, Boaz Weinstein’s Saba Capital was up 2.5% for the month, pushing the flagship fund up 7.3% for the year, according to an investor in the fund.
By comparison, a broad index of hedge funds was down 2.3% in August, its largest monthly decline since May 2010. The HFRI Fund Weighted Composite Index is down 1.2% so far this year. HFRI’s index of relative Value Arbitrage funds — which includes funds similar in strategy to Saba — posted a decline of 1.2% in August, only the third monthly decline for the strategy since December 2008. The index is up 1.9% in 2011.
Saba’s numbers are in line with Weinstein’s hope to make steady 12% to 15% returns by taking advantage of price discrepancies between related bonds and other fixed income securities. Saba’s flagship has made a steady net annualized return of 12.5% since its launch in August of 2009, according to fund investors.
And the Saba Capital Tail Risk Fund – launched late last year to hedge against so-called Black Swan events – is up 17% year-to-date. Performance was boosted by a hefty 15% return in August, when the European debt crisis and slow economic recovery in the United States took down equity and debt markets.
A Saba spokesman declined to comment on this story.
Not only has Weinstein delivered steady performance during a volatile period for markets, he has raised an extraordinary amount of money in a short period of time. Since his launch in August of 2009, Saba has grown from about $150 million in assets under management to $4.2 billion.
“While it is still a very hard fund raising environment, this fund had the components investors look for: pedigree, infrastructure, and performance,” says Emma Sugarman, global head of capital introduction at BNP Paribas. “We are starting to see more and more interest in emerging or mid-size managers.”
The combination of performance and fund raising makes Weinstein one of the more successful hedge fund managers to emerge from the 2008 financial crisis. (He was featured on Fortune’s 40 Under 40 list last year as well.) His fund was considered one of the more promising launches of 2009, and it seems he has delivered on that promise.
But it has not always been smooth sailing for the 37-year-old, thanks in part to financial crisis-related woes. As was widely reported at the time, Weinstein’s trading desk was hit hard during the credit crunch. The San Diego County Employees Retirement Association’s investment committee voted not to place money with Saba this summer, because of the losses that he incurred while at Deutsche Bank (DB) in 2008.
Apparently the pension board’s outside portfolio advisor, Lee Partridge of Salient Partners, neglected to mention Weinstein’s blow up at Deutsche Bank to SDCERA, and the board was caught off guard when a member brought up the losses at a meeting.
But in August, the board of the $8 billion pension fund changed its mind and voted to invest $100 million with Saba.
“We put [Weinstein’s] losses at Deutsche Bank into perspective vis a vis how much he was managing for the bank, and his entire career,” says Michelle Butler, a spokeswoman for SDCERA. “Yes, he lost a lot of money, along with many others during the financial crisis, but it was small compared with he magnitude of what he managed and the financial crisis.”
Weinstein worked for Deutsche Bank from 1998 until 2009, racking up billions in profits and becoming the bank’s youngest ever managing director at the age of 27.
In the end, Butler says that investing in Saba was an opportunity “not to be missed.”
Investors who got in much earlier probably feel that way, too.
