Vulture Fund

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Bankruptcy

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

    An aggressively managed portfolio of investments that uses advanced ...
  3. Interest

    1. The charge for the privilege of borrowing money, typically ...
  4. Junk Bond

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

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

    1. The use of various financial instruments or borrowed capital, ...
Related Articles
  1. Hetty Green: The Witch Of Wall Street
    Professionals

    Hetty Green: The Witch Of Wall Street

  2. Taking A Look Behind Hedge Funds
    Mutual Funds & ETFs

    Taking A Look Behind Hedge Funds

  3. How To Profit From Debt Securities In ...
    Mutual Funds & ETFs

    How To Profit From Debt Securities In ...

  4. Do Focused Funds Provide a Better Outlook?
    Mutual Funds & ETFs

    Do Focused Funds Provide a Better Outlook?

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center