In 2020, Convertibles delivered its best performance since 2009, why should they be an essential part of your portfolio in 2021?

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.

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Recent Updates

Insurance Companies and Convertible Bonds: How SSI’s IG Strategy Fits in an Asset Allocation Framework

SSI Principal and Portfolio Manager, Ravi Malik, CFA, discusses the role Convertible bonds play in

SSI’s Investment Grade Strategy Current Opportunity Set Considerations

SSI portfolio manager, Stephen Wachtel, CFA, examines the current opportunity set within the Convertible bond

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¹The 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.