Global Convertible Bond Strategy
Global Convertible Bond Strategy

Global Convertible Bond Strategy


The Global Convertible Bond Strategy is designed to take advantage of the attractive risk/return characteristics of convertible bonds by allowing meaningful participation in equity market growth while attempting to manage downside risk through fixed income. The strategy combines top-down macroeconomic analysis with rigorous bottom-up fundamental research to help mitigate credit risk.

Single Country or Region Exposure
Security Weight
Typical Number of Holdings
Investment Approach

The investment team believes that successful convertible management depends on the following:

  • Active management of the delta
  • A total-return focus
  • A global approach
Emphasis on Total Returns

The team focuses on total portfolio return rather than managing very closely to a chosen benchmark. In the team’s view, this enables active delta management, which allows for the optimal risk/return positioning of the portfolio.

Focus on Attractive Opportunities Globally

In order to emphasise the factors that matter most—namely, sensitivity to equities and credit—the team believes it is crucial to conduct convertible investing on a global basis. This also provides a broader universe of attractive opportunities and helps ensure sufficient portfolio diversification.

Global Resources and Insight

The team draws on the collective expertise of Morgan Stanley’s global and regional equity and credit teams, leveraging proprietary macroeconomic and asset class research and interest rate models. These global resources enhance the team’s ability to select and manage convertibles.

Investment Process
Macroeconomic assessment:

The process begins with a top-down analysis of the macroeconomic environment to determine the portfolio’s target equity sensitivity or delta. The team uses both proprietary and third-party macroeconomic research and asset class analysis to evaluate economic indicators, market dynamics and relative valuations.

Fundamental analysis:

The team separates the analysis of a security’s equity and debt components in order to provide a more accurate evaluation of the value of an individual convertible.

Portfolio construction:

A portfolio of 100 to 150 issuers is constructed, with sector and geographical allocation driven primarily from bottom-up security selection (subject to the team’s risk management guidelines). Integral to portfolio construction is the ongoing management of equity sensitivity, credit sensitivity and interest rate sensitivity, with risk evaluated and managed at a security and portfolio level. The portfolio is hedged back to the base currency in an effort to eliminate volatility associated with currency fluctuations.

Portfolio Managers
Managing Director
20 years industry experience
Managing Director
31 years industry experience