Managers returning to convertibles for safety.

Investment Adviser, July, 2005

Convertibles are returning to favour among fund managers for their bond-like safety and outperformance potential.

Fund managers for Canada Life and JPMorgan Asset Management have advocated a move into the asset class.

Convertibles make up 10 per cent of the initial portfolio in JP Morgan Cautious Total Return fund, launched on 1 July, and regarded as significant contributors to its aim to return 3 per cent above base rate.

JP Morgan said it planned to increase this exposure as the fund grew, and believed many investors had forgotten their benefits.

The manager said: "Convertible have long been used by investors looking to generate a higher return than bonds, but at a lower risk to capital than equities.

"Since 1995,...

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