Investment management firm Algebris Capital has shifted its investment strategy regarding Turkey, moving from a previously bullish position to purchasing credit default swaps as concerns about credit risks in the country have increased.

The London-based hedge fund, which had maintained an optimistic outlook on Turkish assets, has now adopted a more defensive posture through CDS positions. Credit default swaps are financial instruments that allow investors to hedge against or speculate on the creditworthiness of countries or companies.

The strategic shift reflects broader concerns about Turkey's economic fundamentals and credit profile. The move by Algebris signals a reassessment of risk factors that could impact Turkish government and corporate debt.

Algebris Capital, founded by Davide Serra, manages approximately $2.5 billion in assets and focuses primarily on European credit markets and emerging market debt. The firm's change in Turkey positioning represents a notable reversal from its earlier confidence in the country's economic prospects.

The timing of the strategy change comes as global investors have been reevaluating exposure to emerging market debt amid changing economic conditions and geopolitical uncertainties affecting developing economies.