The win-win case for convertibles

Investors are missing a valuable source of protection against market swings, says Advent’s Daniel Partlow

Investors in both equity and credit markets suffered in 2022. But a powerful risk management tool was available that too few of them used.

Convertible securities, often ignored by investors, have shown in recent years they can deliver positive returns in good times, and shield investors when markets are miserable.

Convertibles exhibit positive asymmetry, or so-called “structural alpha”, meaning they tend to capture more of the upside than the downside when underlying common stock rises or