We bring a high conviction pure-play focus to European convertibles with a sustainable focus to maximise convexity.
We fully integrate environment, social and governance principles into the investment process, which amplifies convexity. ESG materiality is at the core of our approach, and we look to understand what extra-financial risks and opportunities companies are facing, the potential financial impact and how they concretely respond to these risks and seize those opportunities.
We invest solely in convertibles, with no exposure to synthetic securities and in order to express our convictions, we have a high weighting to off-benchmark positions. Through proprietary research, we apply our own rating methodology so we can confidently invest in companies that don’t have an official rating by a credit agency.
We manage positions actively because dispersion within markets always provides opportunities. We actively focus on delta so the strategy becomes more sensitive to equities or bonds depending on the market environment.
We focus on a smaller segment of the convertible bond universe that provides the best asymmetric profiles. This allows us to capture upside in rising markets while limiting downside in falling markets. An overall balanced convertible profile is pursued in a well-diversified portfolio across regions and sectors.
We employ convexity to manage risk (limiting downside risk and participating in upward equity markets) with a delta target of between 30%-60%.
We expect smaller companies to outperform because they combine a high level of cyclical exposure, which will lead to a good rebound in profitability with the unlocking of economies, with cheaper relative valuations.
The team have almost 60 years of combined experience managing convertibles, having faced all phases of the credit cycle.
We build a concentrated portfolio with circa 40 holdings, using proprietary research to select companies for their high return potential. Our high-active share reflects an unconstrained approach across sectors and regions, alongside off-benchmark opportunities.
The team use exclusions and positive selection, alongside active in-depth analysis and engagement to assess how well a company is managing industry challenges and addressing sustainability and climate transition. The Fund is classified as Article 8 for the purpose of SFDR and has been awarded the SRI label issued by the French Ministry of Finance.
Mirabaud Sustainable Convertible Bonds Europe Strategy details, reporting and monthly commentary.
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