Global Convertible Bond Fund — Balanced Growth

Global Convertible Bond Fund: Bond Protection, Equity Participation

Convertible bonds sit at the intersection of fixed income and equities — a hybrid asset class that can provide materially better risk-adjusted returns than either asset class alone over a full market cycle. For investors seeking growth without the full volatility of equity markets, convertibles offer a compelling structural case.

This UCITS fund invests in a globally diversified portfolio of convertible bonds across developed and select emerging markets, targeting a total return of 6–9% per annum over a market cycle.

How Convertible Bonds Work

A convertible bond is a corporate bond with an embedded option. Like any bond, it pays a coupon and returns par at maturity if the issuing company remains solvent. Unlike a plain bond, it also gives the holder the right to convert the bond into shares of the issuing company at a pre-agreed price.

This creates what practitioners call the asymmetric return profile — the defining characteristic of convertibles:

When equity markets rise: If the underlying share price rises above the conversion price, the convertible trades increasingly like the underlying equity, capturing meaningful upside participation. A well-positioned convertible might capture 60–75% of the equity upside.

When equity markets fall: The bond floor provides a cushion. As the share price falls away from the conversion price, the convertible's value is increasingly underpinned by its value as a bond — its coupon payments and return of par at maturity. In practice, the bond floor limits downside participation to roughly 40–60% of the equity fall.

This asymmetry — capturing more upside than downside — is the reason convertibles have historically produced equity-like long-run returns with materially lower volatility than equities.

Portfolio Construction

The fund holds 60 to 80 convertible bonds, selected on a global opportunity set:

North America (approximately 45–55% of the portfolio): The US is the world's largest convertible market. The portfolio focuses on established companies with strong balance sheets and well-structured conversion terms — technology, healthcare, and consumer sectors are typically well represented.

Europe (approximately 25–35%): European convertibles from across the Eurozone, UK, and Switzerland, spanning industrials, financials, and infrastructure.

Asia-Pacific (approximately 15–25%): Select convertibles from Japan, Australia, and developed Asian markets, providing geographic diversification and exposure to Asian corporate growth.

The portfolio manager targets convertibles with delta (equity sensitivity) in the 30–60% range — "balanced" convertibles that display the most pronounced asymmetric return characteristics, rather than either deep in-the-money (which behave like pure equity) or deeply out-of-the-money (which behave like pure bonds).

UCITS Regulatory Framework

The fund is domiciled in Ireland and authorised under the EU UCITS framework, one of the most stringent regulatory standards for investment funds globally. UCITS provides investors with:

• Quarterly dealing windows with independent pricing
• Annual audited accounts
• Independent depositary/custodian
• Diversification limits enforced by regulation
• Investor rights governed by EU fund law

Risk Considerations

Equity market risk: Convertibles retain significant equity sensitivity. In a severe, sustained equity market decline, the bond floor does not fully protect investors — credit spreads widen simultaneously, compressing bond values. Convertibles typically fall less than equities in downturns, but they are not a risk-free investment.

Credit risk: As bonds, convertibles carry the credit risk of the issuing company. The fund focuses on investment-grade and crossover-rated issuers, but issuers may be downgraded or default.

Liquidity risk: Convertible bonds are less liquid than large-cap equities or government bonds. In a market dislocation, bid-offer spreads can widen significantly, and the quarterly dealing window may be suspended in extreme circumstances.

Interest rate risk: As bonds, convertibles have some sensitivity to interest rate movements — rising rates can reduce bond values, though this is offset by equity exposure.

Suitability

This fund suits investors seeking equity market participation with reduced downside risk — an alternative to a pure equity allocation within a diversified portfolio. It is appropriate for investors with a minimum three-year horizon who understand that convertibles carry both equity and credit risks and who are comfortable with the illiquidity premium relative to listed equities.

How to Invest

Contact our investment team to receive the fund's KIID, prospectus, and current portfolio factsheet. We will discuss the fund's role within your overall asset allocation before recommending whether it is appropriate for your circumstances. Minimum investment £75,000.

Important: Capital is at risk. Past performance is not a guarantee of future returns. This is for information purposes only and does not constitute a personal recommendation. Seek independent financial advice before investing. This fund illustrates the type of convertible bond opportunity Global Investments advises on — it is not a live investment offer.