The case for convertibles

Lakshman Harendran, member of the global convertible bond team at RWC Partners, argues that convertibles are an ideal investment for today's high-risk, low-yield environment.

Over the last half-decade or so, the investment landscape has fundamentally changed into what some have termed the “new normal” for financial markets. From our perspective, the key characteristic of this environment is extremely low developed market interest rates, which are likely to stay at a near-zero level for a number of years. There is also the potential for recurrent crisis situations, which may lead to spikes in volatility causing concerns among equity holders or dampening the desire to increase weightings to equities as an asset class. This paradigm shift has far-reaching i...