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.

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 90 to 140 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  
Tom Wills
Managing Director
26 years industry experience
Andrew Cohen
Executive Director
22 years industry experience

Effective October 1, 2022, Christian Roth stepped down as Portfolio Manager and Andrew Cohen was added to the Strategy.

Effective May 27, 2022, Richard Class has stepped down as a Portfolio Manager.



Diversification does not protect you against a loss in a particular market; however it allows you to spread that risk across various asset classes.

There is no assurance that a portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market value of securities owned by the portfolio will decline. Market values can change daily due to economic and other events (e.g. natural disasters, health crises, terrorism, conflicts and social unrest) that affect markets, countries, companies or governments. It is difficult to predict the timing, duration, and potential adverse effects (e.g. portfolio liquidity) of events. Accordingly, you can lose money investing in this portfolio. Please be aware that this portfolio may be subject to certain additional risks. Fixed-income securities are subject to the ability of an issuer to make timely principal and interest payments (credit risk), changes in interest rates (interest-rate risk), the creditworthiness of the issuer and general market liquidity (market risk). In the current rising interest-rate environment, bond prices may fall and may result in periods of volatility and increased portfolio redemptions. Longer-term securities may be more sensitive to interest rate changes. In a declining interest-rate environment, the portfolio may generate less income. Investments in foreign markets entail special risks such as currency, political, economic, and market risks. The risks of investing in emerging market countries are greater than the risks generally associated with investments in foreign developed countries. In addition to the risks associated with common stocks, investments in convertible securities are subject to the risks associated with fixed-income securities, namely credit, price and interest-rate risks. Geographic concentration. As the portfolio can concentrate on a single country/region, it is more susceptible to such risks affecting the issuers within the concentrated country/region than a portfolio that does not concentrate its investments to such issuers. When investing in value securities, the market may not have the same value assessment as the manager, and, therefore, the performance of the securities may decline.

This communication is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Past performance is no guarantee of future results.

A separately managed account may not be appropriate for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required. For important information about the investment manager, please refer to Form ADV Part 2.

Any views and opinions provided are those of the portfolio management team and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring. The views expressed do not reflect the opinions of all portfolio managers at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

All information provided has been prepared solely for information purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.


The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.

The Refinitiv Convertible Global Focus USD Hedged Index is a market weighted index with a minimum size for inclusion of $500 million (US), 200 million (Europe), 22 billion Yen, and $275 million (Other) of Convertible Bonds with an Equity Link.

The information presented represents how the portfolio management team generally implements its investment process under normal market conditions.

Morgan Stanley Investment Management is the asset management division of Morgan Stanley.

Effective 21 February 2020, the benchmark changed from the Thomson Reuters Convertible Global Focus (USD Hedged) Index to Refinitiv Convertible Global Focus (USD Hedged) Index.


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