These managers attempt to exploit mispricings within different securities of either the same issuer or of issuers with similar fundamental characteristics.

This strategy often involves exploiting the optionality that may be present in select securities, particularly convertible bonds.

Typical strategies include convertible bond arbitrage, credit arbitrage and derivatives arbitrage.

The identification of investment opportunities in misvalued securities is a difficult task, and there can be no assurance that such opportunities will be successfully exploited and may be adversely affected by a decrease in market liquidity for the instruments traded.