Hedge Funds Return to Bond Trade With Checkered Past
- Man Group is increasing its exposure to convertible arbitrage
- Market has matured since 34% slump in 2008, proponents say
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A surge in issuance of a type of bond that can convert into stock on maturity is helping revive a hedge fund strategy that was crushed during the financial crisis.
So-called convertible arbitrage, in which investors try to capitalize on price discrepancies between a convertible bond and its underlying stock, attracted inflows in the first quarter as investors pulled billions out of other strategies, according to data from Nasdaq eVestment.