Mirabaud - Discovery Convertibles Global A cap. USD

Performance update

December delivered heightened financial market volatility, influenced by central bank decisions and geopolitical events. Equity markets declined amid inflation concerns. Fixed income markets also weakened as investor sentiment reacted to interest rate dynamics, highlighted by a 40bp rise in the US 10-year Treasury yield to 4.57%.

In terms of fund performance, region-wise on an absolute basis, Japan and APAC contributed while EMEA and, more importantly, North America detracted. Sector-wise on an absolute basis, IT and communication services contributed while healthcare, materials and industrials detracted. At the security level, the three leading relative positive contributors were Blackberry 3% 15/02/2029, US Steel 5% 2026, Bloom Energy 3% 2028. The three main relative detractors were Lyft 0.625% 2029, Pager Duty 1.5% 2028 and Wisdomtree 3.25% 2029.

Portfolio activity

During the month, we exited Cineplex 7.75% 2030, Kosmos Energy 3.125% 2030, Lyft 0.625% 01/03/2029, Rémy Cointreau (Orpar) 2031, Saipem 2.875% 2029, Wayfair 3.25% 2027, Webuild (Salini) 4% 30/05/2027 and Workiva 1.25% 2028. We initiated a new position in the primary market on Fluence Energy  2.25% 15/06/2030 and added in the secondary AEIS 2.5% 2028, Alphawave 3.75% 2030, Copt Defense 5.25% 2028, Ferrotec 0% 2028, HA Sustainable Infrastructure Capital 3.75% 2028, Ibiden 0% 2031, Itron 1.375% 2030, Omnicell 1% 2029, Synaptics 2031 and Varonis 1% 2029.

Sector-wise, IT represents our largest exposure at 41.35% (17.56% OW) followed by materials at 14.38% (7.66% OW), healthcare at 14.04% (8.58% UW), consumer staples at 6.59% (3.28% OW), consumer discretionary at 6.14% (5.56% UW), financials at 6.04% (0.54% UW), industrials at 4.38% (6.36% UW), energy at 2.99% (0.47% OW), utilities at 1.48% (0.20% UW), communication services at 1.14% (2.92% UW) and real estate at 0.92% (5.20% UW).