Schroder Investment Management Limited
31 Gresham Street, London EC2V 7QA
Telephone +44 (0)20 7658 6000 Fax +44 (0)20 7658 6965
www.schroders.com
News Release
Schroders sees convertible bonds as top
performer in 2014 as global fund passes
$2bn
31 January 2014
Despite the current low growth, low interest rate economic cycle and likely risk of rates increasing in
the US in 2014, Schroders believes there will be solid equity market performance and that convertible
bonds are set to be one of the best performing fixed income asset classes this year. Schroder ISF1
Global Convertible Bond also recently celebrated passing $2bn2 of assets under management with
strong performance over one year against the benchmark by returning 15.8%3.
The strong case for global convertible bonds in 2014 is underpinned by the interest rate protection
they offer, the strategic growth tilt and participation in the equity market via a long-term option, which is
paired with strong credit selection. This provides investors with a balance of equity exposure and
safety. Global convertible bond funds also offer diversification and protection benefits from local
issues given their ability to invest broadly across regions and sectors. Some of the issues of 2013
though have made significant progress, for example the US debt ceiling and European banking
regulation, which will continue to improve investor sentiment and drive market returns. However, there
is some risk of volatility with market stress from the equity and credit side.
New issuances, which are crucial for sustaining a diversified convertible market and providing a good
alpha source, are also likely to continue to be strong in 2014.
1
Schroder International Selection Fund is referred to as Schroder ISF
2
Schroders as at 3 January 2014
The team is currently overweight
3
Schroders as at 31 December 2013 (A Acc, USD). Performance data is on a NAV to NAV basis, net income
reinvested. Benchmark is UBS Convertible Global Focus (returned 13% over the same time period).
Schroders plc
Registered office at above address
Reg. 3909886 England
1
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Schroder Investment Management Limited
31 Gresham Street, London EC2V 7QA
Telephone +44 (0)20 7658 6000 Fax +44 (0)20 7658 6965
www.schroders.com
cyclicals, such as industrials, as well as IT and consumer discretionary and is underweight financials
and telecoms.
Dr Martin Kuehle, Investment Director, Convertible Bonds at Schroders, commented:
“Convertible bonds offer a solution to investors who do not have the risk appetite to buy equities or are
constrained by regulation. While some investors have seen significant returns in the equity markets
others have experienced this from the side lines hoping for a setback to finally get on board. We
therefore forecast strong demand for convertibles either on a stand-alone basis or as a stable building
block for fixed income portfolios.”
Philippe Lespinard, Co-Head of Fixed Income at Schroders, also commented:
“Surpassing the $2bn milestone is testament to the strength of our recently expanded convertibles
team, which has also produced great performance for our clients. Market conditions are looking
favourable for convertible bonds due to their low sensitivity to rising interest rates and exposure to high
growth companies but with a defensive structure. They therefore offer an attractive investment
opportunity for 2014.”
For further information, please contact:
Georgina Robertson, International PR
Tel: +44 (0)20 7658 3365/ georgina.robertson@schroders.com
Kathryn Sutton, International PR
Tel: +44 (0)20 7658 5765/ kathryn.sutton@schroders.com
Notes to Editors
For trade press only. To view the latest press releases from Schroders visit:
http://ir.schroders.com/media
Schroders plc
Schroders is a global asset management company with £256.7 billion (EUR307.2 billion/$415.8 billion)
under management as at 30 September 2013. Our clients are major financial institutions including
pension funds, banks and insurance companies, local and public authorities, governments, charities,
high net worth individuals and retail investors.
With one of the largest networks of offices of any dedicated asset management company, we operate
from 37 offices in 27 countries across Europe, the Americas, Asia and the Middle East. Schroders
Schroders plc
Registered office at above address
Reg. 3909886 England
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Schroder Investment Management Limited
31 Gresham Street, London EC2V 7QA
Telephone +44 (0)20 7658 6000 Fax +44 (0)20 7658 6965
www.schroders.com
has developed under stable ownership for over 200 years and long-term thinking governs our
approach to investing, building client relationships and growing our business.
Further information about Schroders can be found at www.schroders.com.
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Schroders plc
Registered office at above address
Reg. 3909886 England
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