INSIGHTS

Wellesley Asset Management Surpasses $3 Billion in Regulatory Assets Under Management as They Celebrate Their 30th Year Anniversary

By: Business Wire

WELLESLEY, Mass.–(BUSINESS WIRE)–Wellesley Asset Management is pleased to announce it has surpassed $3 billion in Regulatory Assets Under Management* this summer. This milestone was accomplished as Wellesley celebrates its 30th anniversary as a nationally recognized Registered Investment Advisor and Asset Manager with a singular focus on convertible bonds. Wellesley’s Founder and CEO, Greg Miller, who was recently named as Forbes #3 ranked Investment Advisor in Massachusetts for 2021** has utilized a conservative approach to convertible bonds since 1991.

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Inflation and its Impact on Portfolios

Greg Miller CPA, CEO & Portfolio Manager
Michael Miller CFIP, President, CIO
Dennis Scarpa CFA, Senior Analyst

Until recently, inflation has been seemingly non-existent. Between 2008 and the beginning of 2021, inflation had increased by approximately 1.6% per year. Fast forward to today — a basket of goods and services as measured by the Consumer Price Index (CPI) has risen by over 5% each month since May 2021. On October 22, 2021, the ten-year breakeven inflation rate or breakeven yield hit 2.64%, the highest rate since 2012.

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The Convertible Investor – Summer 2021

Greg Miller CPA, CEO & Portfolio Manager
Jim Buckham CFA, Portfolio Manager
Howard Needle, Portfolio Manager
Dennis Scarpa, CFA Senior Analyst
  1. INFLATION IS REARING ITS UGLY HEAD – IS YOUR PORTFOLIO READY
  2. DOWNSIDE PROTECTION: A CASE STUDY OF WAM’S RETURNS IN 2008
  3. THE RATIONAL INVESTOR?
  4. Q&A WITH THE PORTFOLIO MANAGERS

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High Yield – High Risk, Low Return

Greg Miller CPA, CEO & Portfolio Manager
Michael Miller CFIP, President, CIO
Jim Buckham CFA, Portfolio Manager
Howard Needle, Portfolio Manager

With high yield coupons or current yields at historically low levels, the perceived credit worthiness of high yield issuers is extremely optimistic as evidenced by historically tight credit spreads and Treasury rates at very low levels. As such it may be challenging for high yield investors to achieve attractive risk-adjusted returns over the foreseeable investment horizon.

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The Benefits of Convertible Arbitrage

Greg Miller CPA, CEO & Portfolio Manager
Michael Miller CFIP, President, CIO
Jim Buckham CFA, Portfolio Manager
Howard Needle, Portfolio Manager

There was time in the late 1980’s and early 1990’s when genuine arbitrage opportunities existed in convertibles as a large swath of the convertible bond market was mispriced.  The rapid development of the high yield market in the 1980’s and the disconnect between high yield and convertibles was the primary cause for that mispricing.  High yield investors typically ignored converts as the high yield market was being created and garnered the majority of investor attention.  High yield trading desks were part of fixed income divisions; whereas, convertible trading desks sat on the equity floor.

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The Benefits of Synthetic Convertible Bonds

Howard Needle, Portfolio Manager

Convertible bond investors are often frustrated with limited investment choices or options regarding convertible securities especially related to sporadic or narrow convertible issuance, or that the universe of companies and sectors with outstanding convertibles is not larger or more diverse. 30+ years of experience has taught that there are frequently times an investor wants to purchase a convertible bond in a great company only to discover that no convertible exists.

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Winter 2021: The Convertible Investor

Michael Miller CFIP, President, CIO
Dennis Scarpa CFA, Senior Analyst

 Why Wellesley’s Convertible Bond Strategy Now?
 Wellesley Asset Management’s Investment Process: The Three Legs of the Stool
 The Traditional 60/40 Portfolio is DEAD
 Got the Need for Income in Retirement

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Convertible Bonds and Rising Interest Rates: A Happy Marriage

Greg Miller CPA, CEO & Portfolio Manager
Michael Miller CFIP, President, CIO
Jim Buckham CFA, Portfolio Manager
Howard Needle, Portfolio Manager

For the better part of the past 40 years interest rates have been trending lower (1) (display #1 below). Ten-year U.S. Treasury bond yields peaked at 15.84% on September, 30, 1981. More recently, the trend of lower rates accelerated beginning November 8, 2018 when 10-year U.S. Treasury bond yields began a descent that saw their yield drop from 3.23% to a recent jaw-dropping all-time low of 0.40% on March 9, 2020. Although the recent bond sell-off beginning in August, 2020 saw yields jump to 0.95% on November, 10, 2020, interest rates remain at historically and incredibly low levels.

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Convertible Bonds: Strategic Asset Allocation Guide

Michael Miller CFIP, President, CIO
Dennis Scarpa CFA, Senior Analyst

Convertible bonds as an asset class are experiencing a resurgence in popularity as companies seek new sources of financing during COVID-19. Combining both stock and bond features, convertible bonds provide investors with many attractive features including: return of capital (barring default), current income, and the potential for upside appreciation.

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August Commentary 2020

Greg Miller CPA, CEO & Portfolio Manager
Michael Miller CFIP, President, CIO
Jim Buckham CFA, Portfolio Manager

On the heels of an abysmal February and March for equity-centric investors, market participants were rewarded during the second quarter.

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Sweet Spot Investing with Convertible Bonds

Jim Buckham CFA, Portfolio Manager

Convertible bonds are sometimes considered the “Swiss Army knife” of financial products because they can provide investors with principal protection (barring default), income, and equity-like returns.

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Convertible Bonds: The Advantages of Synthetics

Greg Miller CPA, Founder, Chairman and CEO
Michael Miller CFIP, President, CIO
Jim Buckham CFA, Portfolio Manager
Dennis Scarpa CFA, Senior Analyst

One type of convertible bond that you may be unaware of is called a synthetic convertible bond (“synthetic”). Synthetics offer a different take on this hybrid product by potentially adding more protection and differentiation to the asset class.

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“Alternative” Investments for Retail Clients

Greg Miller, CPA, CEO & Portfolio Manager
Darlene Murphy CPA, CFP®, Portfolio Manager
Michael Miller, Chief Investment Officer
Jim Buckham, CFA, Portfolio Manager

Learn how investors can utilize convertible bonds in a diversified portfolio to achieve the same outcomes that traditional alternative investments have historically provided.

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Chasing Dividends Instead of Buying Bonds

Michael Miller CFIP, President, CIO
Dennis Scarpa CFA, Senior Analyst

One of the biggest challenges facing retirees is trying to find the “right” amount of money to receive on a monthly basis.

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Why Convertible Bonds

Michael Miller CFIP, President and Chief Investment Officer
Dennis Scarpa CFA, Senior Analyst

Convertibles are a unique asset class that is often overlooked by many investors. They can offer the best of both worlds, combining desirable features of both stocks and bonds.

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Bull, Bear and Upside-Down Markets

By Jim Buckham CFA, Portfolio Manager

An informative historical review of bull and bear markets leading up to the present state of our global economy

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WAM October 2019 Advisor Commentary

Greg Miller CPA, CEO & Portfolio Manager
Michael Miller CFIP, President, CIO
Jim Buckham CFA, Portfolio Manager

Stock and bond market commentary from the Portfolio Managers of the Wellesley convertible bond strategy

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Convertible Bonds as an “Equity Replacement Strategy”

Greg Miller CPA, CEO & Portfolio Manager
Darlene Murphy CPA, CFP®, Portfolio Manager
Michael Miller CFIP, President, CIO
Jim Buckham CFA, Portfolio Manager

This piece discusses how implementing a convertible bond strategy as an “equity replacement” can allow investors to stay long the market while potentially enhancing downside protection.

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Not All Bonds Are Created Equal

Greg Miller CPA, CEO & Portfolio Manager
Darlene Murphy CPA, CFP®, Portfolio Manager
Michael Miller CFIP, President, CIO
Jim Buckham CFA, Portfolio Manager

Explore how convertible bonds may mitigate interest rate risk in a fixed income portfolio during rising rate environments

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Lessons from “the Lost Decade”

Greg Miller, CPA, CEO & Portfolio Manager
Darlene Murphy CPA, CFP®, Portfolio Manager
Michael Miller, Chief Investment Officer
Jim Buckham, CFA, Portfolio Manager

This piece looks back at the two stock market downturns from 2000-2009 and how investing in convertible bonds could have produced meaningful returns over that same time period.

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