So far this year, we have seen a reversal of the risk-off sentiment experienced in late 2018.
Risk assets, including global equities, bonds and FX (especially in EM domiciles) have potentially paved the way for growth in certain pockets of the market this year. With the Davos summit going on and earnings being released, equities have faced more of a two-way market. It is a reminder that volatility could be more common as we move further into this elongated cycle.
Against this backdrop, convertible bonds have continued to offer investors an alternative route to navigating risk. In 2019, the Thomson Reuters Qualified Global Convertible Index has so far returned 2.59% (USD terms, unhedged), while the euro-hedged performance stands at 2.53%. These returns place the index firmly amongst the top performers within fixed income.
