Vulture funds: Kettle call

Double-digit returns sound pretty attractive when the economy is slumping. So it’s no surprise that cash ploughed into distressed debt funds now tops $200bn. These so-called vulture funds can return 30% or more annually during economic meltdowns. But credit-boom innovations will make it harder for them to wring such rewards out of the coming wave of defaults. The best-performing vulture funds typically take an active role in a borrower’s bankruptcy. They may snap up deeply discounted debt after...