One man’s crisis is another man’s opportunity. Distressed Asset AIFs (a type of Special Situations Fund) specialize in buying the debt or equity of companies that are facing financial trouble or bankruptcy. These assets are often purchased at a deep discountÑpennies on the dollar.
The strategy is simple but risky: buy low, restructure the company (turnaround), and sell high. Successful managers in this space are experts at navigating insolvency laws and operational restructuring. For investors, this counter-cyclical strategy offers the potential for outsized returns that are completely uncorrelated with the booming stock market.
