The subprime loan fiasco will actually boost the returns of hedge funds holding instruments that take advantage of distressed debt, or inefficiencies in the market, AFX International Focus reports. But hedge funds holding credit default swaps, a form of credit protection, will suffer, industry insiders said.One fund that will benefit is the $13 billion Paulson Credit Opportunities

Fund. Year to date, it’s up nearly 130%, rising 40% in June alone.

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