Convertible bonds continue to play a distinct role within diversified portfolios by offering a hybrid exposure to both equity and fixed income markets. Entering 2026, the asset class reflects attractive valuations, broad sector representation, and a robust issuance universe, providing investors with an alternative way to gain equity participation while maintaining fixed income characteristics.   View PDF

Innovation is reshaping every industry, led by breakthroughs in AI, clean energy, satellites, and more. Yet investing directly in high-growth equities can mean elevated risk. Convertibles offer an alternative – allowing investors to capture upside from these transformative trends while providing downside protection. SSI explores these opportunities and shows how active management can help navigate this evolving market in our latest white paper.

The Convertible Bond Outlook for 2025 highlights a strong performance in 2024, with convertible bonds, as represented by the ICE BofA All US Convertible Index (VXA0), returning +11.14% and outperforming major fixed income indices. The outlook for 2025 remains positive, with expectations of continued issuance growth, balanced market conditions, and potential outperformance of small and mid-cap equities if interest rates stabilize.

Monetary policy is on course to being normalized after the unprecedented actions of the Fed, both on rates and the balance sheet, in the post-Covid era. Meanwhile, equity valuations are approaching the first quartile of their long-term range, driven by productivity gains and technological developments such as Generative AI.  In this unique environment, Investment Grade Convertible Bonds are a timely investment and carry several significant advantages for the insurance industry.

Broadening the field of potential investments provides diversification and, if done effectively, reduces portfolio volatility. Out latest research paper explores some of the common pitfalls in risk management.