Convexity in vogue

Convexity in vogue


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Hedge funds seek differentiation in new strategies

Investors withdrew over US$31bn from hedge funds in September, according to Hedge Fund Research. However, amid the consequent shakeout in the sector, some credit hedge funds are differentiating themselves by focusing on convexity strategies.

Credit hedge funds are pursuing two strategies in the current environment. The majority - distressed/credit opportunity-type funds - are going long, which implies a strong view that the market has reached the bottom.

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