The market volatility, as a consequence of the crisis of coronavirus, can lead investors in fixed rent to look for alternatives to existing strategies. One approach that you can consider is that of investment in convertible bonds, which historically have provided some resistance to portfolios in stages of high market volatility and have generated attractive returns, adjusted for risk in the long term.
In the current economic and market environment, convertible securities may present some attractive features for investors. They are less sensitive to movements than the underlying stocks, on average they offer a higher yield (coupon) than ordinary bonds and, fundamentally, even though they have the same characteristics as ordinary bonds, give the holder the right to convert them into shares.
From the group of funds that invest in this type of asset globally, for greater diversification, the highest rated, five stars of VDOS, have been selected, with a minimum contribution requirement of 6,000 euros or less.
Product to product
Within the category Global Converti International Fixed Income VDOSbles, the best performance in the year corresponds to class A in euros of Franklin Global Convertible Securities, with a revaluation of 4.31%.
In the last year, it obtained a return of 17.51%, with a volatility data of 17.51%. The fund seeks to maximize the total return obtained through prudent management that seeks to optimize capital appreciation and periodic income, under different market conditions.
Managers invest in corporate issuers with all kinds of credit ratings globally. The higher positions in your portfolio include emissions Cellnex Telecom SA (1.93%) Coupa Software Inc (1.92%) Twilio Inc (1.91%) Microchip Technology Inc (1.91%) and Danaher Corp (1.89%).
The minimum investment to subscribe class A in euros of this fund is 5,000 dollars (approximately 4,620 euros) applying to its participants a fixed commission of 0.75% and a deposit of 0.14%.
Historical profitability. VDOS source.
Another of the best performing funds in the category is the Lazard Convertible Global, with a return of 2.8% since the beginning of the year in its RC class in euros. At one year, 8.14% is revalued, with a cost for volatility of 14.26%.
Its objective is to achieve a higher return in the medium term than its benchmark, the Thomson . Convertible Global Focus in euros. To do this, perform a dynamic management of interest rate risks, currencies and credit, with a rigorous selection of securities.
Among the largest positions in the portfolio of this fund are issues of Microchip Techno Inc, Sika AG, Akamai Technologies, Weibo and Palo Alto Networks. The minimum investment to subscribe the RC class in euros of this fund is one participation, with its last net asset value data being 433.26 euros. His fixed commission is 1.46%.
Denominated in dollars, class A of fund accumulation Schroders ISF Global Convertible Bond it increased by 3.27% in the year and 11.63% in the last annual period, in which it registered a volatility data of 11.63%.
Actively managed, it invests in a wide range of convertible issues from companies around the world. Among its largest positions are emissions of Palo Alto Networks, SBI Holdings Inc, China Railway Construction Corporation Limited or Geely Sweden Financials Holding, among others. To subscribe class C of accumulation in dollars of this fund, a minimum contribution of 1,000 dollars (approximately 924 euros) is required, taxing its participants with a fixed commission of 0.75% and a deposit of 0.30%.
Markets have recently been characterized by wide credit spreads, at the same time that stock price-to-profit was moderating and valuations of convertible issues are at levels not seen since 2016. These conditions could act as drivers for continuity in the positive evolution of convertibles in the future. In these circumstances, it can be a type of asset to consider both at a long-term strategic level and at a tactical level.