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Dalton closes distressed debt funds

Investment management firm Dalton Investments has announced that it is to close two of its funds worth around $300 million in total.

The two funds, Dalton Global Opportunity Fund and the Dalton Distressed Debt Fund, were both distressed debt funds, making money by betting on companies' bad fortunes.

Dalton Investments said that they had been happy with the performance of the two funds, but felt it was time to change tactics.

Steven D. Persky, the portfolio manager of the two funds, said: "Although the past performance of these funds was excellent, we believe it will become increasingly difficult to produce above-average returns with a distressed strategy for the foreseeable future.

"We will best serve our investors by returning their capital so they can redeploy it in other strategies."

The two funds had showed growth rates of 13.5 per cent and 7.3 per cent over recent years, but recent strong economic growth and companies' access to cheaper capital has been blamed for a shortage of lucrative distressed debt options.

Los Angeles-based Dalton Investments currently has $1.3 billion worth of assets under management, investing in Japan, China and in global equity.