Distressed debt funds fail to attract inflows despite growth in distressed assets

Distressed debt investing returned to the spotlight in 2008, when the financial and economic crisis resulted in a marked increase in the number of distressed situations, and the new ‘fallen angels’ in structured finance joined the traditional distressed universe of high yield bonds and bank loans.

To benefit from this unique set of circumstances, distressed debt funds have been raising money over the past two years but inflows don’t seem to have been commensurate with the expansion of the distre