The hybrid investment

Convertible bonds offer exposure to the ‘best of both worlds' across bonds and equities, writes RWC's Lakshman Harendran.

The current market environment potentially makes the asset allocation decision increasingly challenging when it comes to equities. By and large, consensus estimates continue to forecast a positive year for equity markets. Indeed, less than three years on from the dark days of the 2008 crisis, corporate balance sheets are the healthiest they have ever been, companies are sitting on several thousand billion dollars of cash, cost structures are leaner and top-line revenues have generally been on an upwards trend. Thus, while real GDP growth in developed markets has been somewhat lacklustre,...