At first sight, convertible arbitrage hedge funds look set for a horrible year. Issuance is the lowest since 2005, when 50 of them went out of business. According to Dealogic, $53.8bn of convertible bonds have been issued globally so far this year, equivalent to $86.1bn on an annualised basis. But if this rate of issuance continues for the rest of this year, it will be the lowest for six years.

The year 2005 was a disaster for the convertible arbitrage hedge fund strategy, which involves taking one position on a convertible security and a hedging position in its common stock. Over the course of that year, after two years of lacklustre returns and amid fears of an overcrowded market, investors pulled their money away, causing assets in convertible arbitrage hedge funds to fall by more than 30% to $25.4bn, according to Hedge Fund Research. Many managers were wiped out.