Convertibles
Equity
High Yield Bonds
Investment Grade Bonds
Cash
S.T & N.O.A
1 - 5 YEARS
6 - 10 YEARS
11 - 20 YEARS
21 - 30 YEARS
31 + YEARS
PFD(EQUITY)

Credit Quality Distribution as of 12/31/2015

AA
A
BBB
BB
B
CCC
<CCC
Not Rated

Portfolio Details as of 12/31/2015

Total Net Assets
$644.27 M
Number of Holdings
123
Average Coupon
2.43%
Average Maturity
9.03 Years

Portfolio Positioning as of 12/31/2015

  • Convertible securities experienced multiple headwinds to performance as the underlying equities posted negative returns and credit spreads continued to widen in the second half of the period. The U.S. Federal Reserve’s announcement to raise interest rates contributed to the heightened volatility and spread widening seen in the fourth quarter of 2015. 
  • As we expect volatility to remain elevated in the near future, we maintained a bias towards large cap companies and liquid securities. We continue to closely monitor near-term developments in credit markets with an emphasis on fundamental valuations and earnings trends.
  • We remain positive on the state of the U.S. consumer and therefore have maintained the portfolio’s overweight allocation to the consumer discretionary sector. We see an improving housing market as representative of a stronger U.S. economy, and we believe that low energy costs and the strengthening employment environment will remain a tailwind for domestic discretionary spending. 
  • After convertible issuance began 2015 at a brisk pace, the second half of the year saw issuance slow significantly, although with a small pickup in the fourth quarter. We anticipate that M&A activity financed with convertible debt will continue to be an attractive option, particularly in industries like life sciences, where valuations are favorable and the likely acquirers still have ample access to capital.
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