The convex nature and low duration characteristics of Convertibles provide an improved risk/reward profile to the underlying equities, with more enhanced downside protection than common equity positions, and less interest rate risk than most other fixed income investments. This allows for a different outcome as market volatility increases, if we should experience a significant downturn in the market, or if rates adjust.
Meaningful gains were booked in 2020 through the bonds that were exchanged/converted, while new issuance resupplied the momentum of the asset class with a wide breadth of balanced new issues. This natural conversion of securities combined with maturing issues removes downside risk to some equity-like issues in the market. For example, a portion of the outstanding Tesla issues have been converted in 2020, while one Tesla issue matures in March of 2021.