What can investors expect from convertibles after 'best year since 2013'?

clock • 2 min read

Convertible bonds are set to record their best year of absolute performance since 2013 this year, with the TR Global Focus Hedged Convertible Bonds Index (USD) up 7.25% as at the end of October.

The growth bias inherent within the asset class has been a benefit, while regional skews towards Europe and Japan, and the falling volatility regime, have acted as a significant headwind. Going into 2018, we see the asset class set to benefit from the late-cycle reflationary market environment, with rising interest rates that could potentially lead to a pick-up in market volatility. The asset class provides a balanced exposure to financial markets, with low interest rate sensitivity and a dynamic equity sensitivity so that it becomes more equity-like to the upside and more bond-like t...

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