Utilizing Convertible Bonds In Today’s Mature Bull Market

Jim Buckham, Portfolio Manager, Wellesley Asset Management met with Julie Cooling, Founder & CEO, RIA Channel to discuss the benefit of convertible bonds and the firm’s overall investment process.

Wellesley Asset Management is an absolute returns and convertible bonds shop, investing with multiple strategies such as, separately managed accounts, three mutual funds, and a private hedge fund. Buckham spoke specifically on Wellesley’s liquid alts mutual fund and private hedge fund, which both utilize different levels of leverage.

In terms have how advisors and portfolio managers are currently using Wellesley, Buckham explained that in addition to alternatives, they often get allocated as a fixed-income replacement or as apart of the equity sleeve due to the equity-like returns and limited volatility. “We think it’s time for people to start thinking about defense,” Buckham said on today’s very mature Bull Market.  In keeping balanced bond rates, investors will maintain equity exposure in case of upside, but if stocks do sell off, the bond floor will come into play and offer protection from correlated downside risk in equities, believed Buckham.

Based in Massachusetts, Wellesley Asset Management specializes in convertible bonds and currently manages over $2.7 billion in assets.