Hedge funds return to bond trade with checkered past

So-called convertible arbitrage, in which investors try to capitalise on price discrepancies between a convertible bond and its underlying stock, attracted inflows in the first quarter as investors pulled billions out of other strategies. — Reuters

NEW YORK: A surge in issuance of a type of bond that can convert into stock on maturity is helping revive a hedge fund strategy that was crushed during the financial crisis.

So-called convertible arbitrage, in which investors try to capitalise on price discrepancies between a convertible bond and its underlying stock, attracted inflows in the first quarter as investors pulled billions out of other strategies, according to data from Nasdaq eVestment.