Hedge funds made strong returns in 2010 purchasing mortgage securities trading at distressed prices. However, the long-predicted double dip in US home prices raises questions about the relative attractiveness of this strategy in 2011.
The S&P Case Shiller 20-City Composite, which tracks home prices in 20 major cities in the US, fell 1.6% for the 12 months to November 2010, the second consecutive month of annualised declines since prices stabilised in 2009.
The expectation is that home prices will
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