When will the convertible bubble burst?

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The continuing success of convertible-arbitrage funds continues to confound skeptics

It's no secret that convertible-arbitrage funds have become something of a darling to hedge fund investors. Throughout the last two years they have poured a record amount of capital into this strategy, which is known for its steady returns in all forms of market conditions.

But with convertible funds flush with cash at a time when global issuance has dropped dramatically, some investors - not to mention a few managers - are wondering how much longer the party can continue.

While managers have continued to reap strong rewards in an