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Convertibles

A history of equity-type returns with bond-like risk

Why convertibles?

Convertible bonds are an attractive way to gain exposure to a prolonged market recovery with lower risk than equities. Although considered ‘exotic’ by some, convertible bonds are actually a standard asset class like bonds and equities. They play an important part in the financing cycle of companies and, as a significant part of a company’s balance sheet, investors who limit themselves to investing in traditional debt and equities are omitting an important asset class from their asset allocation.

We believe they deserve a place in a diversified asset allocation strategy.

About convertible bonds

In many ways, convertible bonds are similar to standard corporate bonds. They have all the typical features of debt instruments – but they give investors the option of exchanging the bond for a predetermined number of shares.

Convertible bonds:

  • Offer the investor the chance to gain exposure to another security (an equity) with the potential for greater returns
  • Have historically offered investors equity-type returns with bond-like risk
  • Offer an attractive mix of yield and equity exposure
 
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