i genuinely do not see how the ~$40B of "distressed credit" funds will be deployed in a way that generates even 10-12% returns tbh forget the high-teens to twenties that the investors are actually hoping for. a huuuge part of market has totally normalized

the RMBS that is ~safe~ is trading mid single digits, CMBS has been bid relentlessly (idk why, I really don't think the C/E is thick enough there but its not my focus) resi and PL IOs at BEST at high single digits (vs realistic speeds). hecm io all getting lifted

prime and subprime auto are back to being able to securitize and new CLOs are coming out faster than the new distressed funds so they'll get first dibs on the syn loans, so that basically leaves whatever older CLOs start failing tests and get locked out + hard-money lending

I think everyone is thinking about the post GFC RMBS trade tbh. hedge fund liquidations are over.. margin calls are over, reit liquidations are over and the buyers were real money who wont sell. who is going to do the selling @ the lows so the hero funds can do the buying?

if you are betting on downgrades triggering sales from CLOs then the other CLOs will beat the funds bc they'll be here earlier. leaves what? ETF rebalances? in FI it doesnt work like in stocks, the indices mostly hold a sample of the index and have leeway they wont firesale