According to Loomis Sayles, bond hedge fund managers are complete morons. They’re bets in junk bonds have gone awry in a most horrendous fashion. Apparently, losses for the industry are of the record breaking varietal.
If you enjoy the content at iBankCoin, please follow us on Twitter“It is probably going to be the worst quarter in history for a number of the fixed income-oriented hedge funds,” Fuss said at an event in Tokyo on Thursday. “A few are already known but there are some that were wiped out and just wound down.”
Hedge funds that bet on bonds prices falling were caught off guard as individual investors poured money back into junk debt funds in February, according to Fuss. The funds that used borrowed money to short the debt found they couldn’t cover those wagers as institutional holders were unwilling to sell and there were fewer dealers at investment banks to act as market makers, he said.
“The market is going, I think, to stay thin” he said. “Volatility will stay high any time you have a major change like this.”
