This strategy specialises in purchasing high yield, non-investment grade bonds. The strategy is somewhat similar to investing in distressed securities in that it primarily invests in low-grade, fixed-income securities of companies that show significant upside potential. However this strategy does not invest in companies that have actually missed coupon payments or in bankruptcy. As there tends to be better liquidity and a public market (although often very thin), returns are generally less than for alternative strategy funds which invest in distressed securities, but volatility is also reduced.
