May 2017
Growth in a fixed income wrapper
When it comes to growth stocks, few or no investors think of convertibles. This is a wrong perception, since the first convertible was issued in 1843 precisely for this reason: to finance an ambitious growth company, the New York and Erie Railroad Company. A growth tilt that is still in the market today: Many innovative, rapidly growing companies are issuers of convertibles. These are often growth stocks, far away from the blue-chip driven (Equity-) indices. Convertible Bonds have the legal wrapper of a fixed-income instrument with a legal right of repayment and coupon in the prospectus. So it is an attractive opportunity also for fixed income investors to think about investing in convertibles given the greater growth momentum and performance of small and medium-sized companies.
