Portfolio diversifiers
Convertible bonds have proved their longevity and worth over the last 150 years, the asset class can provide investors with a way to enhance portfolio performance and increase risk-adjusted gains.
- Opportunity to further improve risk-adjusted earnings
- Portfolio diversity
- Protect against increasing rates
- Exposure to growth securities
fixed income and equity-like characteristics
Convertible bonds are often an overlooked investment vehicle; they provide equity-like possibilities for financial growth and possess the downside safeguards typically associated with bonds. Convertibles may additionally add the all-important diversity to your portfolio. Typically, they have outperformed bonds and stocks in the long run, often padding losses whenever stock markets drop.
Balance economic uncertainty
As the world's insurance companies and pension funds face EU's Solvency II and IORP II directives and carry on evaluating the overall performance of their investment portfolios, we anticipate the specific success components associated with convertibles to be understood much more than they are currently.
Furthermore, with climbing US interest rates and low yields leading to anxiety within financial markets, convertible bonds' distinct performance attributes are especially suited.
Protected invested interests
Convertibles are intended to present issuers with a desirable method to fund growth and to provide investors a lower-risk solution to invest. Initially utilized to finance the high-risk US railway sector back in the 1860s, businesses were able to get a loan relatively inexpensively when trying to grow, in return for providing the bondholder a choice to convert the bond into collateral.
This allows investors to be involved in a company's development, whilst providing them with safeguards in case those development plans don't work out as planned.
