In the current environment, convertible bonds’ limited downside risk and asymmetrical risk profile can offer investors an attractive opportunity.
Over the first three quarters of the year, convertible bond funds registered in Switzerland have attracted estimated net flows of CHF 354.7 million.
But how have global convertible bond managers been faring? Over three years to the end of September 2017, the average manager has landed a total return of 6.8%.
We take a look at the top three managers dominating the sector and reveal which high-flyer is generating three times the return of the average manager.
3. Miles Geldard & Lee Manzi, Jupiter
Fund managed: Jupiter JGF Global Convertibles I CHF Acc HCS
Total return over three years: 13.8%
Leading the way in terms of performance in the convertible bonds sector is the Jupiter duo, Lee Manzi and Mile Geldard. The pair have generated the third largest returns in the sector over the past three years.
The two managers first joined Jupiter in 2010 and have managed the CHF 911.9 million fund since October 2012.
Geldard is head of strategy for Jupiter’s fixed income and multi-asset team.
The portfolio is largely invested in the US, which represents 20.3% of its exposure, followed by Japan at 18.2%.
2. Daniel Björk, Swisscanto Asset Management
Fund managed: SWC (LU) BF COCO ATH CHF
Total return over three years: 15.4%
Generating the second biggest returns over three years is Zurich-based manager Daniel Björk.
The manager has been running the CHF 388.2 million Luxembourg-domiciled fund since 2012, when he took over from former managers Mirko Santucci and Blaise Roduit.
The portfolio is composed of 120 positions, the largest of which is from the issuer Banco Santander, representing 5.19% of the total allocation.
In terms of country allocation, the portfolio's biggest exposures are to the UK (19.4%) and Spain (14%).
1. Arnaud Brillois, Lazard Frères Gestion
Fund managed: Lazard Convertible Global AC H CHF
Total return over three years: 18.7%
The top manager surpassing all others is Arnaud Brillois. He first started to outperform his peers in the sector in the summer of 2016 and has since returned three times the average manager’s total return.
The co-head of the alternative investments, structured products and convertibles department at Lazard has managed the fund since 2008.
The CHF 975.2 million fund has a strong overweight to the benchmark in the technology sector, which represents more than a third of its allocation. Nearly half of the fund is invested in the US.
Over the first three quarters of the year, the Lazard fund attracted estimated net flows of CHF 528.6 million across all share classes.