Vulture Fund


DEFINITION of 'Vulture Fund'

A fund that buys securities in distressed investments, such as high-yield bonds in or near default, or equities that are in or near bankruptcy.

BREAKING DOWN 'Vulture Fund'

Even highly leveraged firms may be targeted if there is a chance that the owners will not be able to make all required debt payments. As the name implies, these funds are like circling vultures patiently waiting to pick over the remains of a rapidly weakening company. The goal is high returns at bargain prices. Some people have looked down upon hedge funds that operate like vulture funds, which have preyed on the cheap debt of struggling companies and forced these companies to pay it back, plus interest.

  1. Interest

    The charge for the privilege of borrowing money, typically expressed ...
  2. Hedge Fund

    An aggressively managed portfolio of investments that uses leveraged, ...
  3. Junk Bond

    A colloquial term for a high-yield or non-investment grade bond. ...
  4. Default

    1. The failure to promptly pay interest or principal when due. ...
  5. Leverage

    1. The use of various financial instruments or borrowed capital, ...
  6. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
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