Convertible Bonds

Europe is at the heart of our convictions

Europe is at the heart of our convictions

In a low interest rate environment where equity volatility is high, convertible bonds stand apart because of their convexity, i.e. their ability to capture part of equity market rises while cushioning losses in down periods thanks to their bond floor.

Halfway between equities and bonds, convertibles help revitalise bond allocations or reduce risk in equity exposure, notably by reining in volatility.

Convertibles currently offer a variety of opportunities and our investment team’s convictions place Europe as the zone to focus on. We can expect ongoing quantitative easing, the lower euro, cheaper commodities and upbeat macroeconomic developments to provide support in coming months.

The experience of a convertible bond pioneer

Edmond de Rothschild Asset Management has more than 20 years’ experience in convertible bonds and is one of Europe's largest players as far as assets under management are concerned. We have a comprehensive range of open-ended funds covering all geographical zones. Two funds help tap into today’s favourable conditions in Europe: 


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Edmond de Rothschild Asset Management (France)
47 rue du Faubourg Saint-Honoré
75401 Cedex 08 Paris

+ 33 1 40 17 25 25
Edmond de Rothschild Fund Convertible Europe All Caps: due to its risk/return profile, the fund is ranked in the risk class 4. The sub fund’s investments are subject to the usual market fluctuations and other risks inherent to investments in securities and there is no guarantee that the capital invested will appreciate or that distributions will be made. The price of investments and the income they generate, and thus the price of the sub fund’s shares, may fall as well as rise; there is a risk investors may not recover the amount invested. Investors should be aware that the sub fund may be exposed to credit risk.

Edmond de Rothschild Europe Convertibles: The fund is classified in category 5 (A and I shares) in line with the nature of securities and geographical zones in the “objectives and investment policy” section of the key investor information document (KIID).

Main potential investment risks:
- Capital loss risk: as the fund does not have any guarantee or protection, the capital initially invested might not be restituted in full even if subscribers hold their shares over the recommended investment horizon.
- Credit risk: the main risk is issuer default on interest payments and/or reimbursement of the capital. Credit risk also concerns issuer downgrades. Subscribers are warned that the FCP’s net asset value could fall should a total loss be incurred on a transaction due to counterparty default. Any private company debt held directly by the portfolio or through mutual funds exposes the FCP to changes in the issuing company’s credit rating.
- Risk from holding convertible bonds: convertible bond prices depend on various factors like interest rate levels, fluctuations in the underlying equities and changes in the valuation of the convertible’s built-in equity option. All these factors could entail a fall in the fund’s net asset value.
- Interest rate risk: the fund’s ability to invest in fixed income products exposes it to interest rate variations. Interest rate risk might entail a capital loss from yield curve movements.

November 2015. Non-binding document. This document is for information only. The data, comments and analysis in this bulletin reflect the opinion of Edmond de Rothschild Asset Management (France) and its affiliates with respect to the markets and their trends, their regulation and tax treatment, on the basis of its own expertise, economic analysis and information currently known to it. However, they shall not under any circumstances be construed as comprising any sort of undertaking or guarantee whatsoever on the part of Edmond de Rothschild Asset Management (France).

Edmond de Rothschild Fund - Convertible Europe All Caps is a sub fund of the Luxembourg regulated SICAV which is approved by the CSSF and approved for marketing in France, Belgium, Germany, Italy, Luxembourg, Spain, Switzerland. Management of the subfund, EdR Fund – Convertible Europe All Caps, has been delegated to Edmond de Rothschild Asset Management (France) which also acts as the fund's global distributor.