There are signs that investors are gathering more capital for distressed debt investing, yet distressed investment seems to be lagging, even as the primary high yield market booms. Observers note that macroeconomic fears may be keeping investors away as defaults and bankruptcies are expected to spike.

The California Public Employees Retirement System (CalPERS), which manages $169 billion in assets, could dedicate as much as 3% of its total assets, or approximately $5 billion, to distressed debt.

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