Higher rates are unlikely to detour convertibles

Higher rates are unlikely to detour convertibles

A common misperception of the convertibles market is that the returns of these securities are more dependent on interest rates than on other factors. Over time, data have suggested that convertibles are driven more by the strength or weakness of the equity markets, and corporate credit spreads. And because the convertibles are short-duration instruments, there

Part 2: Hold the middle ground

Part 2: Hold the middle ground

Dogged by lingering memories of the 2008–2009 bear market, many investors remain cautious about increasing their exposure to equities — even though equities today offer compelling value relative to most fixed-income asset classes. At the same time, many bond investors are finding it necessary to assume greater credit risk to capture higher yields amid a