It is hard to resist the temptation of investing in a venture that promises to bring great returns on investment. Investors around the country are found complaining about shrinking profits on their different modes of investments. Stock market is full of uncertainties and the property market is sluggish. Many find investing in Forex market risky because of the volatility and error in judgment. Amidst all these fears has arisen a new mode of investment known as distressed debt investing. If you do not know, it is investment in distressed debt market that is cash strapped and allows for purchase of loans from banks and other institutions that are seen as non-performing or belong to companies that are on the verge of declaring bankruptcies.

Distressed investing takes an inverted view of troubled companies
It is typical of investors to look at companies that are performing well and invest in its shares in the anticipation of these shares going further up. However, distressed debt investing takes a U-turn as far as investment philosophy is concerned and aims at distressed securities in the hope of grabbing it at rock bottom prices and a revival in the fortunes of the company. Yes, this is not a traditional move for the investors and this is why hedge funds managers are using this ploy to diversify the portfolio of their funds in a bid to increase the return on the investment by the customers.

Distressed debt is not for liquidation
Today there are many firms specializing in distressed debt investing. These firms are always looking for companies on the verge of bankruptcy as they know they can get the securities at rock bottom prices. Their penchant for debt ridden companies has made a section of the media label them as vulture capitalists. However, not for a moment should an investor think of these firms as being bad as a vulture for they invest in a troubled company not to liquidate it but to help in restoring its health back to normal. Click here to continue reading about investing in distressed debts.

Once a troubled company has been targeted, distressed debt investing firm tries to get hold of the debts of such companies from banks and other institutions. This strategy gives the firm leverage over the operations of the company and it can call the shots when making important decisions regarding restructuring. The firm is now standing ahead of the shareholders of the company and is able to get back all its investment with big returns. Continue reading here to learn more about these benefits.