Double exposure

Hedge funds are allocating more to distressed strategies following lack of opportunities elsewhere

Frank Russell's fund of funds has increased its exposure to mortgage-backed securities funds, based in the US, and pure distressed debt funds.

Derek Doupe, head of alternative investments at Frank Russell, says the move into mortgage-backed securities was formed partly by the cyclicality of markets and lack of opportunities in some other strategies.

'Convertible arbitrage returns will come down but will still be acceptable, and we have made movements out of M&A positions into pure distressed