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Ingrid Neitsch, portfolio adviser for the fund of hedge funds, said although it would be "some time" before the rebound took place, there were "near-term opportunities" emerging in oversold structured credit markets.

She said: "Managers will need to have superior fundamental research skills and will probably run their portfolios with a material net-long exposure to profit from the overall tailwind of rising security values.

"The most obvious risks are the existence of genuinely bad assets that are unlikely to produce alpha even in the event of an economic recovery, and the danger of further technical shocks arising from reduced liquidity."

Despite the credit crunch headlines of the last nine months, the number of companies defaulting on their debt obligations was at record lows, Ms Neitsch added.

"Managers are practically unanimous in their expectation that the environment for distressed companies will only get better over the next two to three years, with the peak of the default cycle occurring in 2009-10," she said.

The fund is listed on the Irish Stock Exchange and trades on the London Stock Exchange.