The term vulture fund refers to a portfolio of investments that specialize in holding the securities of financially distressed organizations. Vulture funds provide their investors with higher than average yields by purchasing securities at depressed prices.
Also known as vulture investing, vulture funds specialize in the purchase of both the debt and equity of distressed organizations. This includes commercial companies as well as nations. While a hedge fund may also be a vulture fund, the most common formation is through private equity.
Vulture funds can provide their investors above average returns in several ways: