High Conviction Pure-Play strategies
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.
Dynamic approach with fully integrated ESG
We fully integrate environment, social and governance principles into the investment process, which amplifies convexity. ESG materiality is at the core of each of our convertible strategies 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 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 also have no restraints on region or sector resulting in very high active share ratios.
Our strategy takes a highly dynamic approach to global convertibles by selecting high growth opportunities in small and mid-cap companies with a sustainable focus to capture upside potential with an effective protection against volatility.
A Hybrid Structure that’s difficult to replicate
Convertible bonds combine characteristics of equities and bonds, providing unique opportunities for managing risk and enhancing returns. Like equities, convertibles provide upwards participation in rising equity markets and are less sensitive to rising interest rates. The convertible’s fixed income characteristics (the bond floor and coupon income) can help smooth out periods of downside equity volatility. Like bonds, convertibles provide some element of income and less downward in declining markets, with less interest rate risk.
Convertibles remain attractively valued
Convertible bonds remain cheaper relative to their long-term fair value, supported by the higher market volatility that we are currently experiencing. Today valuations are a greater source of alpha than medium-term risk for the asset class.
Lower interest rate risk
With inflation at all-time highs and central banks raising interest rates, convertibles provide duration protection because they have a negative correlation to government bonds and are positively correlated to equities and corporate bonds.