WEST PALM BEACH, FL (www.hedgeco.net) – Hedge funds now wield significant influence over trading in US Distressed debt according to a recently released study conducted by Greenwich Associates, analternative investment advisory firm. According to the study, hedge funds now account for over one third of all the trading activities in futures, junk bonds and other credit derivatives.
According to Greenwich Associates, “Hedge funds made up 82 per cent of trade volume in US distressed debt and almost 30 per cent of volume in US below-investment grade bonds and credit derivatives.� The research explained, that hedge funds �accounted for more than half of the listed or plain vanilla over the counter options contracts and almost a third of the total number of futures traded in the US last year.�
The study further stated that hedge funds, �take these markets that are relatively inefficient and they focus a lot of intelligence and a lot of research on them and those inefficiencies start to whittle away.” William Wechsler, one of the report’s authors, said “You are talking about relatively narrow markets in general . . . [but] these are the markets that are targeted by hedge fund strategies. What it generally shows is that assets under management are still small but in terms of their importance to Wall Street and to the brokerage community they are massively important.�
Hedge funds also are getting involved in European distressed debt as well, and they are also increasingly drawn to the Asian distressed debt as well. Increased liquidity for such trading as a result of the willingness of banks to finance such trade has also helped to push the levels transactions to its current stage.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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