Managers foresee Lazarus-esque revival from convertible arbitrage

Fund of fund managers are predicting good buying at "ridiculously cheap" levels from convertible arbitrage, once the 2005 sell-off is over

Fund of hedge fund managers are cautiously optimistic that convertible bond arbitrage may provide good buying opportunities in the fourth quarter of 2005 after the sector has slumped so far this year.

After experiencing $1.8bn in net redemptions in the fourth quarter of 2004, convertible arbitrage had lost on average -7.6% in the three months to 30 April, according to statistics from Tass.

However, some fund managers predict a brighter future for the beleagured strategy. Tim Haywood, chief

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