Smart-Stock.net

The global trend of falling property market prices has brought with it increased investor interest in distressed assets. Last month, Business 24/7 writer Darren Stubing described this investment trend amongst hedge funds and private equity funds.

Many financial strategists look to 2010 and beyond as a likely date for future recovery in the asset prices for distressed mortgage accounts, underscoring our consistent message that distressed asset investment should be part of a patient investor’s investment portfolio.

Stubing points out that distressed assets can include CDO (collateralized debt obligations) assets, and that these may not technically be distressed due to poor credit. This makes CDOs an attractive investment option.

According to Stubing, “distressed asset funds raised $30 billion (Dh110bn) in the second quarter of 2008, up significantly from the previous quarter.” Additionally, several blue-chip investment firms are creating their own distressed asset funds or investing heavily in such funds. Blackstone Group, Carlyle Group, and Private Equity Partners are among those who have raised between $1 to $2 billion.

Such investment focus is not just a U.S. trend. Across Europe, India, and Asia, many funds and firms are following suit. London hedge fund GLG Partners has created a team of distressed asset experts to help them invest heavily in the market. Another British firm, The Berkeley Group, is looking to buy up distressed development land. Worldwide, the list goes on.

Finally, the three-year trend for global asset investment is as follows: $13 billion in 2006, $33 billion in 2007, and an expected $60 billion plus in 2008. Impressive.