Convertible Arb. Shows Solid Returns, Takes Number Two Spot In Indices

By Deirdre Brennan

After an ugly 2005, hedge fund experts declared convertible arbitrage all but dead, saying that the field was too crowded and opportunities were far and few between. While October returns for the asset class were weak (up 0.76%, according to the Dow Jones Hedge Fund Indexes), convertible arbitrage managers posted the best results for the third quarter, 3.27%, and the strategy is up 9.51% year-to-date, making it second-highest performer in the Dow Jones indices.