Navigating volatility: Convertible bonds shine in sell-offs and offer opportunities for nervous investors

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. Ivan Nikolov, Head of Convertible Bonds, argues now is a great time to revisit the asset class.

Key takeaways from our new paper (PDF):

• Innovation and growth megatrends, like AI and healthcare spending, should keep delivering economic growth. However, unstable economic data, elections, and geopolitics continue to put more bumps on the road to positive investment returns
• Asymmetrical CB payoff profiles enable investors to gain from rising stock prices but with lower volatility and drawdowns
• Megatrends vs mega-caps: CBs can provide exposure to many growth stocks outside of the handful of mega-caps, which have gained the most so far and remain prone to more corrections
• The current increased issuance and M&A activity bode well for our favourite asset class
• It's the right time to add tactical allocations to CBs on top of any strategic. An active, disciplined investment process is key, however, as benchmarks alone rarely capture the full benefits of the asset class.

View paper as PDF