Investors fear missing out on distressed debt

* Investors don't want managers to sit on cash

* Distressed debt environment "best in a lifetime"

* Redemptions prevented some funds from deploying cash

By Martin de Sa'Pinto

MONACO, June 18 (Reuters) - Some distressed-debt investors are urging fund managers to be less cautious and to deploy cash quickly before opportunities begin to disappear.

Distressed-debt funds, which invest in corporate bonds paying more than 10 percentage points over Treasuries of the same maturity, raised plenty of money last year, but managers were reluctant to make investments as the global economy continued to deteriorate.

"Some very well-known hedge funds were sitting on 50 percent cash at the beginning of the year when they should have been buying," said Maria Boyazny, managing director at private investment company Siguler Guff.

"We're in the biggest distressed cycle since the last generation -- we don't want someone sitting on our cash in the best investment environment we're going to see in a lifetime," she told attendees at a distressed debt session at the GAIM alternative investment management industry conference in Monaco.