SMA - Wellesley Asset Management

SEPARATELY MANAGED ACCOUNTS

Equity Market Exposure, Pursuing Principal Protection

Convertible bonds may be a suitable investment for absolute return oriented, long-term investors. Wellesley Asset Management offers separate account management for registered investment advisors, sponsored managed account platforms and other institutional investors. Convertibles can offer equity market exposure while seeking principal protection and the relative safety of bonds. Convertible bonds may outperform equities over complete bull and bear market cycles and do so with less volatility than a typical stock portfolio.

Diversification Benefits

Convertible bonds may be an option for investors looking to diversify their portfolio. For the period, January 1, 2008 through September 30, 2017 Wellesley’s (WC) 1 Convertibles Composite had a correlation of 0.10 with the Bloomberg Barclays Capital U.S. Aggregate Bond Index and 0.82 with the S&P 500 Total Return Index.

A Blend of Debt and Equity

Convertible bonds can blend the characteristics of both bond and stock investments. Convertibles can offer equity like returns due to the equity conversion component with generally less volatility.

Use with Multiple Asset Classes

Convertibles may provide attractive returns that can compare to common stocks and bonds. Historically, in periods of rising interest rates, most fixed income instruments have lost value while convertible bonds have oftentimes increased in value on a total return basis during these periods. In addition, adding convertibles to a stock and bond portfolio may improve the overall risk/return profile.

For more information on the Wellesley Convertible Separately Managed Account Program, please call 781-416-4000 or e-mail information@wam.com

Market Insights

Inflation and its Impact on Portfolios

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.

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Celebrating 30th Year and Over $3 Billion

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

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Convertible Investor – Summer 2021

INFLATION IS REARING ITS UGLY HEAD – IS YOUR FORTFOLIO READY?
DOWNSIDE PROTECTION: A CASE STUDY
THE RATIONAL INVESTOR?
Q&A WITH THE PORTFOLIO MANAGERS

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High Yield – High Risk, Low Return

A high yield bond investor earns positive returns in three ways — clipping a coupon or current yield, an increase in value of the bond as holders enjoy the fruits of improved credit worthiness of an investment, or a fall in the general level of market interest rates.

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The Benefits of Synthetic Convertible Bonds

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.

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Winter 2021 : Convertible Investor

“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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Convertibles & Rising Interest Rates

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.

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Sweet Spot Investing with Convertibles

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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Advantages of Synthetics

Unlike traditional convertible bonds, the credit exposure of a synthetic remains with the issuing company, typically a bank. The equity exposure, however, is tied to the underlying company’s stock.

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Strategic Asset Allocation Guide

Convertible bonds as an asset class are experiencing a resurgence in popularity as companies seek new sources of financing during COVID-19.

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