The London-listed company will initially target a 4.5% annual dividend, and has the flexibility to invest in new issues and small and mid-cap issues. It will be managed by Antony Vallee, head of JP Morgan’s convertible bond team.
Convertibles are often considered stepping stones between the two asset classes, offering bond-like characteristics in falling equity markets, with the potential to participate in rising markets.
Simon James, Partner at Gore Browne Investment Managers, said: “The convertibles market is limited in comparison to other corporate bond markets, and as investors are less familiar with the market the potential buyer universe is much smaller.
“That said, the issuance is certainly timely, with many investors looking to switch their investments from fixed income to equities. Of course it depends on the valuation of the convertibles but there is certainly the potential for the product to attract investment in the current market.”
Other asset managers have sought a slice of the convertible bonds pie in the past few weeks. In March, Old Mutual announced that it had purchased units in the Mirabaud Convertible Bonds Europe Fund, and before that RWC announced that it had launched a distribution share class for its Global Convertibles Fund to meet investors’ demand for income.
