GAM continues to expand its UCITS III absolute return range with the launch of GAM Star Global Convertible Bond, The fund is co-managed by experienced in-house managers Ben Helm and Alex McKnight and is backed by the resources of the wider GAM fixed income team.
The managers employ a flexible, value-driven investment approach designed to perform across market environments and to have low correlation to both equities and bonds. Their 35 years’ combined experience in convertibles enables them to extract value during different stages of the market cycle using an active non-benchmarked style. This approach is well established and has been successful in their offshore convertible bond hedge fund, which has outperformed its benchmark from inception in July 2005 to December 2010.
Ben Helm, Investment Manager, said: “We believe that convertible bond markets are ultimately driven by economic fundamentals, so first and foremost we establish a global macro outlook in cooperation with the broader fixed income team. Since growth areas are often accompanied by volatility, and volatility creates opportunities for convertibles, we then analyse what is driving growth from a micro, geographical and industry sector level. These areas of growth are where we focus our bottom-up fundamental company analysis to select convertible bond issuers that are attractive from both an equity analysis and a credit analysis perspective.”
Commenting on the outlook for convertibles in 2011, Alex McKnight, Investment Manager said: “The convertibles market is enjoying structural growth thanks to a widening set of investors who recognise that the asset class gives them the potential to capture equity upside in bull markets while protecting the downside during equity bear markets. In addition, the current optimism surrounding equity markets due to expectations of rising interest rates, coupled with longer-term economic uncertainty mean that cyclical conditions are also very supportive for convertibles investors over the next 12 months.”
The team has been running long only, absolute return and hedge fund convertible products for the last five years and is responsible for assets of approximately USD 1.7 billion as at 31 December 2010.