Opportunities are opening up in distressed securities

Merger arbitrage, the most common event-driven strategy, has become overcrowded due to the current economic climate. There is little activity in this area and few opportunities for returns, which is leading to a rise in popularity in other event-driven strategies.

Despite a slight increase in deals over the past two months, most merger arbitrage managers have struggled, according to Tony Morrongiello, chief executive of 3A Asset Management, investment manager of Altin, a large fund of hedge funds