Category: WSJ Pro

Distressed-debt funds are about to close out the year with meager returns as junk bond and leveraged-loan investors continued to bail out many troubled companies. Average returns for hedge funds focusing on distressed debt fell to 4.7% year-to-date, from 15.15% during the same period of 2016, according to Hedge Fund Research.

The brisk downturn for the newest type of Fannie Mae and Freddie Mac bonds since May has brought back one of their original fans. Chris Hentemann, chief investment officer for hedge fund 400 Capital, said he stepped back into the market on Wednesday with a piece of Freddie Mac’s latest debt issue that sheds risks of homeowner defaults onto other investors.