The first half of 2022 was a difficult period for most asset classes. The S&P 500 had its worst first half return since 19701. Treasury, investment grade, and High Yield bond returns were near historic lows for any first half. It was also a very challenging period for Convertible bonds. After a stellar 2020 when Convertibles returned 46.2% (as measured by the ICE BofA All US Convertible Index–VXA0) and a solid 2021 return of 6.34% (lagging the S&P but ahead of all major fixed income indices), the asset class struggled in 1H’221. This was due to the poor performance of the underlying equities as well as the widening of credit spreads.
Convertible Bond 2022 Review and 2023 Outlook
The S&P 500 Index, along with most other market indices, rose during the first day