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Barry Ritholtz

Pain for Leveraged Junk Bond Funds

Risky bets have an ugly tendency to go bad.
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Want to go there?

Photographer: Shaun Bloodworth/PYMCA/UIG/Getty Images

In the bond market, you can get liquidity or safety or yield -- but not all three at the same time. Sometimes, even two out of three is a stretch.

The recent suspension of redemptions at Third Avenue Management’s Focused Credit Fund has been a reminder of that. It has caused plenty of angst about the junk bond market, with rising concerns about liquidity.