(Bloomberg) — Investor interest in hedge funds betting on distressed credit is growing as weaker economic growth creates more investment opportunities, according to Morgan Stanley.

Almost half of investors surveyed by the U.S. bank's prime brokerage unit said they may start due diligence on distressed credit hedge funds over the next six to 12 months, according to a report compiled by analysts John Schlegel, Ann McNerney and Vasileios Prassas. It's the credit strategy attracting the most attention, they wrote. An official at the bank declined to comment on the note.

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