Convertibles
Convertible Securities: Combining the Best Attributes of Stocks and Bonds
Convertibles are hybrid securities that can be exchanged for a predetermined amount of the company’s common stock. Essentially, a Convertible is a corporate bond with a value-added component built into it- a stock option hidden inside. Like any other corporate bond, Convertibles promise to repay principal and pay a fixed return. The conversion feature provides Convertibles with the added benefit of unlimited capital appreciation.
As illustrated below, in declining market environments, Convertibles act as corporate bonds and are valued at the traditional bond floor price. In rising market environments, Convertibles appreciate in value in line with the underlying common stock.
SSI offers four compelling Convertible investment strategies: Outright Discretionary Convertibles, Outright Investment Grade Convertibles, Convertible Income Strategy, and Hedged Convertible Opportunity Strategy.
| Outright Discretionary Convertible Strategy | Convertible Income Strategy |
Hedged Convertible Opportunity Strategy |
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| Equity Participation with Downside Protection | Enhanced Returns Relative to Fixed Income | Low Volatility Fixed Income Strategy | Classic Alternative Investment Strategy |