The unprecedented combination of artificially low, central bank manipulated treasury bond yields with elevated inflation presents investors with a serious challenge. When investors earn a rate of interest that is substantially below the rate of price increases in the economy, they lose purchasing power. The loss of purchasing power is very different than periodic corrections in equity prices. An investor with a diversified equity portfolio incurring a 10% portfolio loss often experiences a recovery when conditions improve and market confidence comes back. The net effect on an equity portfolio is that the annualized return, through the correction and recovery periods, will be positive and often in line with long term returns.
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2024: Convertible Bonds Outlook
Convertible bonds, represented by the ICE BofA All US Convertibles Index, rebounded +12.99% in 2023,
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1 The yearly awards, presented by Envestnet | PMC and Investment Advisor recognize active managers who have beaten their benchmarks, shown solid performance in general over time and are the best in their respective asset class. Eligibility requires the portfolio manager have $200 million in assets and three years of experience. Additionally, the managers also need to be open to new investment on the Envestnet platform. Award finalists were chosen using Envestnet | PMC’s proprietary, systematic, and multi-factor methodology for evaluating managers, which takes a variety of qualitative and quantitative criteria into consideration, such as investment process and style, performance, firm profile, customer service, and tax efficiency. SSI Investment Management did not pay to participate.
Past performance is not necessarily indicative of future results.
