Mirabaud - Convertibles Global A cap. USD

Performance update

December 2024 witnessed 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%, a 16bp widening in CDX HY spreads, and an upward revision of the personal consumption expenditure nowcast by 17bp to 3.17%, according to Federal Reserve Bank of Atlanta projections.

In terms of portfolio performance, looking at regional exposure on an absolute basis, Japan and APAC contributed to performance while EMEA and, more importantly, North America detracted. Sector-wise on an absolute basis, consumer discretionary and utilities contributed to performance while IT, healthcare and materials detracted. At the security level, the three leading relative contributors were Accor 0.7% 2027, Zscaler 0.125% 2025 and Daifuku 0% 2030. The three main relative detractors were Wisdomtree 3.25% 2029, Alphawave 3.75% 2030 and Lyft 0.625% 2029.

Portfolio activity

During the month, we exited American Airlines 6.5% 2025, Akamai 1.125% 2029, Blackline 1% 2029, Evolent Healthcare 2029, Liberty Formula One 2.25% 2027, Microstrategy 0.875% 2031, Nutanix 0.25% 2027, Sibanye 4.25% 2028, Snap 0.5% 2030 and Workiva 1.25% 2028. We initiated new positions in the primary market on Affirm 0.75% 2029, Alphawave 3.75% 2030, Fluence 2.25% 2030 and Nutanix 0.5% 2029, and added in the secondary to Alnylam Pharmaceuticals 0.75% 2029, Cytikonetics 3.5% 2027, Meritage Homes 1.75% 2028, Nextera Energy 3% 2027, Spie 2% 2028 and Synaptics 2031.

Sector-wise, IT represents our largest exposure at 28.02% (8.88% OW) followed by consumer discretionary at 17.82% (0.67% OW), healthcare at 15.13% (4.53% OW), materials at 13.18% (8.84% OW), industrials at 8.02% (6.92% UW), financials at 7.64% (0.44% UW), real estate at 3% (3.36% UW), consumer staples at 3.02% (1.81% OW) and communication services at 1.5% (3.74% UW). Geographically, the breakdown is North America at 63.51% (4.03% OW), APAC at 16.31% (3.16% UW), EMEA at 16.04% (1.19% OW) and Japan at 4.08% (2.13% UW).