Market insights

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Following a period of disappointment due to convertible bonds underperforming equity indices, a growing opportunity set and high stock market volatility gives strong reason to expect a sharp reversal of this trend. Hence, some investors are looking for new entry points into the asset class.

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Emerging markets are increasingly maturing into truly emancipated states and now often meet their developed peers as equals. As newly emerged middle powers, they act as connector countries in the reshaping of global supply chains, for example.

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Volatility is back hitting the stock markets, and convertible bonds once again provide investors with an interesting alternative to be more resilient, while remaining invested in growth. Additionally, they offer access to megatrends such as AI and healthcare spending.

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Global corporate bonds are offering attractive returns, while their valuations are not as high as it may appear at first glance. Technical factors offer good support, but a somewhat more defensive positioning in the second half of the year seems prudent.

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After a positive first half of the year, high-yield bonds still offer high yields and therefore an effective buffer in case of widening spreads. We consider the relatively high valuations to be justified in view of the solid fundamentals.