Highland Capital to wind down a hedge fund -source

NEW YORK Feb 20 (Reuters) - Highland Capital Management LP has decided to wind down one of its hedge funds, a person familiar with the matter said on Friday, after investing in relatively high-risk debt.

The Highland CDO Opportunity Fund LP was closed at the end of last year, and Highland Capital was one of the largest investors, the person said.

Returns of the fund were not immediately available, but the fund invested in so-called "opportunistic structured products," the person said.

Structured products are typically pools of securities backed by such things as residential mortgage securities, commercial real estate loans and credit derivatives.

Demand for many structured products shrank dramatically or evaporated in the last several months as investors grew risk-averse, often parking money in U.S. Treasuries or cash.

Last October, Highland Capital said it would liquidate two hedge funds that invested in ailing companies, the $1 billion Crusader fund and the $500 million Credit Strategies fund. (Reporting by Svea Herbst-Bayliss; Writing by Jonathan Stempel)