Global convertibles ideal asset class in current environment

BONDS

While conversely in periods of falling equity markets, the delta decreases providing less participation.

In periods of increased market uncertainty, convertible bonds offer a means to retain exposure to markets while maintaining protection in the event of continued dislocations. As an asset class, convertibles provide an ‘almost automatic asset allocation’, given that as equity markets rise, the delta or equity sensitivity increases, hence participating with more of the upside.In addition, in uncertain periods volatility increases translating to an increase in the value of the options embedded in convertibles. The current friction between improving economic data in the US and worsening s...