a market leader in convertible bonds.
Convertible bonds give investors the potential to benefit from rising markets while limiting the downside in falling markets due to its bond features. This asymmetrical quality can provide useful diversification for traditional portfolios, especially in uncertain times.
Our goal has remained steadfast for over 30 years: to capture the return asymmetry inherent in convertible bonds. We search globally for the best opportunities on offer, while seeking to lower risks through market cycles.1
Convertibles: the best of both worlds.
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Convertible bonds are corporate bonds which give investors an option to convert them into the bond issuer’s shares |
They allow investors to benefit from potential rises in equity markets, limiting the downside in falling markets2 |
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| They are less sensitive than traditional bonds to movements in interest rates3 |
As part of a diversified portfolio, they may increase potential performance while reducing volatility in the medium term4 |
the power of both worlds.
Our aim is to exploit the full potential of this hybrid asset class.
We search across the globe for investment opportunities, looking to bring investors the best the asset class has to offer.
While bold in our investment decisions, we are conservative in our approach to risk. We never invest in convertible bonds with a credit rating below B-, seeking an overall portfolio rating of investment grade at all times.
a balanced approach.
We focus on what we call “balanced convertible bonds”, drawing on both sides of the asset class:
| 1 |
Exposure to equity market rises |
| 2 | Downside protection from bond characteristics We look for a strong bond floor. This is the value of the bond element of the convertible. |
why invest?
A long-standing franchise at Lombard Odier Investment Managers.
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LOIM has been investing in convertible bonds since 1987, building up over three decades of convertible bonds experience across both bull and bear markets. |
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The 11-member investment team performs broad and extensive research, leveraging the research and risk management capabilities of LOIM’s global platforms. |
| ♦ | We search for the best quality investments across different regions, sectors and styles, targeting an overall credit rating of investment-grade for the portfolio. |
investment team.
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Arnaud Gernath Head of Convertible Bonds, London |
investment philosophy.
At Lombard Odier Investment Managers, we adopt a three-pillar investment approach to identify sustainability in financial models, business practices and business models.
| 1 |
Sustainable financial models |
| 2 | Sustainable business practices We look at ESG (Environmental, Social and Governance) factors, seeking to avoid unethical businesses, poor corporate practices and serious controversies. |
| 3 | Sustainable business model In our top-down analysis of sectors and regions, we look at the implications of long-term structural trends. This helps us shape the portfolio’s overall thematic exposure globally. |
The end result
The result is a diversified and high quality global portfolio of balanced convertible bonds, which aims to participate in rising markets while benefiting from the downside protection of a fixed-income structure through the market cycles.5
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sources.
1 There can be no assurance that the Sub-Fund’s investment objective will be achieved or that there will be a return on capital or that a substantial loss will not be incurred. Past performance is not a reliable indicator of future performance.
2 Source: LOIM, Bloomberg 31 May 2018
3 Source: LOIM, Bloomberg, S&P, BoAML, Barclays, 1989–2016
4 Source: LOIM, MSCI World USD, Thomson Reuters Global Index USD, JP Morgan Global Aggregate Bond Index. Past performance is not a reliable indicator or future performance. There can be no assurance that the Sub-Fund’s investment objective will be achieved or that there will be a return on capital or that a substantial loss will not be incurred
5 There can be no assurance that the Sub-Fund’s investment objective will be achieved, that there will be a return on capital or that a substantial loss will not be incurred.
important information.
This document is a Corporate Communication and is intended for Professional Investors only.
This document is a Corporate Communication for Professional Investors only and is not a marketing communication related to a fund, an investment product or investment services in your country. This document is not intended to provide investment, tax, accounting, professional or legal advice.
This document is issued by Lombard Odier Asset Management (Europe) Limited (hereinafter the “Company”). The Company is authorised and regulated by the Financial Conduct Authority (the “FCA”), entered on the FCA register with registration number 515393.
This document is approved at the date of the publishing. The Company is clustered within the Lombard Odier Investment Management Division (“LOIM”) of Lombard Odier Group which support in the preparation of this document and LOIM is a trade name.
Any opinions or forecasts provided are as of the date specified, may change without notice, do not predict future results and do not constitute a recommendation or offer of any investment product or investment services.
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