Global Convertibles

Convertible securities investing has been an important part of Oaktree since the company's formation. Our Global Convertibles strategy emphasizes identifying the greatest bargains across the investable universe - that is, securities that are likely to capture a high percentage of any appreciation of the underlying stocks while being exposed to a much lower percentage of declines that may occur. We focus on securities with such asymmetry across both the balanced and high income (or "busted") segments of the convertibles market. We view this strategy as a conservative way to gain long-term equity market exposure with less-than-commensurate risk to support our objective of achieving superior risk-adjusted returns over a full market cycle.

"Our primary focus is on convertibles that have a clear imbalance of upside potential to downside risk. This superior imbalance is a function of the securities’ credit profile, as well as the convertible structure and pricing," says Andrew Watts, co-portfolio manager. "Convertibles have been attractive in terms of equity participation, fixed income attributes, geographic diversification and quality of issuer," adds Petar Raketic, co-portfolio manager.

Beyond a strong commitment to credit research in selecting investments, our co-portfolio managers have keen insights concerning relative value across domestic and international regions and seek to construct global convertible portfolios with potential for superior risk-adjusted returns in both the balanced and high income portions of the market. In doing so, we aim for broad global diversification in an effort to protect against the impact of poor performance by a particular issuer, industry or region. To further reduce risk, we emphasize convertible securities with loss-preventive features such as short maturities or the right to "put" a security back to the issuer within a few years.

"We place a heavy emphasis on issues with substantial downside protection and diversify by region, sector and industry," says Jean-Pierre Latrille, co-portfolio manager. “We seek to accomplish our mandate through the dedicated application of fundamental credit analysis and adherence to a risk-controlled investment philosophy."

Learn more about Oaktree's UCITS (SICAV) Funds.