Recent market moves have led to uncertainty, elevated volatility and shifting growth expectations. The resulting dispersion can create opportunities for benchmark-agnostic active managers to implement their convictions.
 

Convertibles are the bridge between bonds and equities. We can thus express our views through this dual prism whilst also deriving performance from higher volatility, unlike other traditional asset classes. Sharp moves open up areas for profit-taking and provide advantageous re-entry points.  

The convertible bond universe offers broad regional and sector exposure. It provides diversification vs global high yield (more Asia, less US; more utilities and consumer discretionary, fewer financials, technology and staples names). Convertibles are also a complementary investment for holders of global equities (more Asia, less Europe; more technology and utilities, less energy and communications).

To exploit convexity, we remain long risk relative to the benchmark to maintain a minimum level of absolute equity exposure. We are invested in companies with strong credit profiles, which we believe will weather the storm better than speculative names if spreads widen. Current cash levels are higher than average as a buffer against volatility and to position the portfolios to buy on weakness and participate in new issuance.