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Vulture Funds (Vulture Investing)

Moneyzine Editor
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Moneyzine Editor
1 mins
September 21st, 2023
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Definition

The term vulture fund refers to a portfolio of investments that specialize in holding the securities of financially distressed organizations. Vulture funds provide their investors with higher than average yields by purchasing securities at depressed prices.

Explanation

Also known as vulture investing, vulture funds specialize in the purchase of both the debt and equity of distressed organizations. This includes commercial companies as well as nations. While a hedge fund may also be a vulture fund, the most common formation is through private equity.

Vulture funds can provide their investors above average returns in several ways:

  • Equities: purchasing the common stock of companies the fund anticipates will successfully emerge from bankruptcy.

  • Debt: buying high-yield bonds, also known as junk bonds, of financially distressed companies.

  • Lawsuits: threatening or pursuing lawsuits against both commercial companies as well as impoverished nations, seeking recovery of unpaid debt.

Related Terms

hedge funds, aggressive growth fund, value funds, blend funds, growth funds, family of funds

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