Dubai, 28 April 2014: According to UBP, the outlook for Convertible bonds is highly favourable as more companies turn to convertibles for their financing needs and as investors increasingly see them as a valid alternative to both equities and bonds.

Convertible bonds combine the defensive qualities of straight bonds with the upside potential of equities, which gives them an asymmetric risk/return profile. This characteristic is a considerable advantage in the long term, as it enables this asset class to deliver equity-like performances with significantly lower volatility. The convexity of the asset class thus represents its main advantage and the reason clients add convertible bonds to their portfolios, as they provide an excellent way of diversifying a portfolio.

Union Bancaire Privée has been a forerunner in managing convertible bonds in Europe, an early believer in the many opportunities offered by the asset class. In the Middle East, UBP has offices in Dubai and Beirut.

The team works with a consistent approach to convertible bonds since 1999, basing their strategies on three key differentiating features that lie at the heart of their investment approach: an Investment Grade bias, which strengthens the bond floor and reduces the overall credit risk; a focus on cheap options to maximise convexity; and a discretionary delta management to quickly adapt the equity sensitivity, when needed. 

The investment team is known for its long term views, one of which is that they believe there is still strong value in Europe. The re-pricing movement that has been operating in the European convertible bond space, following the market dislocation in early-2012, is currently producing its positive effects in pushing European convertible bonds value upward.

Through a set of distinctive convertible bond strategies primarily defined by clear equity sensitivity ranges, Union Bancaire Privée provides an alternative to bonds and equities. The defensive strategy for example offers convertible bonds with low equity sensitivity as an alternative to bonds. The appealing long-term risk-return profile of the strategy, which places it in top-position in terms of size in Europe, is based on its positioning: by deliberately limiting the expected upside to equities it enables its holders to benefit from positive yields in a traditionally negative yield environment, strong asymmetry, as well as low volatility.

At the higher delta side of our convertible range, our dynamic European strategy has demonstrated its capacity to stand as a strong alternative to an investment in European equities. Its dynamic positioning - an equity sensitivity varying from 20% to 80% - combined with a pure bottom-up investment process focused on convexity have provided investors with an enhanced risk/return ratio over the long run, characterized by equity-like returns and contained volatility.

Fifteen years after the first strategy was launched by Jean-Edouard Reymond, the team of six manages about €3.5 billion, making UBP one of the major player in the field. At the end of 2013, the dynamic European strategy had delivered 15.3% gross performance, ranking in the 1st quartile of its peer group in terms of performance (on a 1- and 3-years basis).  
 
For further information please contact: Lisa George/Rim Hatim, Iris PR, Dubai, UAE. Tel: +97144341207, Fax: +97144341163. E-mail: lisa@irispr.net/rim@irispr.net. Mobile: +971-55-107 8561/+971-55-5432469.

The information and opinions contained herein were prepared by Union Bancaire Privée, UBP SA (hereinafter, "UBP").

The information herein was obtained from various sources and is believed by UBP to be reliable but UBP makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this document constitute the current judgment of the author as of the date of this document and are subject to change without notice. UBP has no obligation to update, modify or amend this document.

This document is provided for information purposes only. It is not to be construed as an offer to buy or sell or solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The financial instruments discussed in this document may not be suitable for all investors and these materials should not be regarded by recipients as a substitute for the exercise of their own judgment. Investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situation and their investment objectives. Investors should be aware that foreign exchange rates may have a negative effect on the price or value of, or the income derived from, an investment denominated in a foreign currency. Furthermore, past performance is not necessarily indicative of future results.

UBP may make a market in, or may, as principal or agent, buy or sell securities of the companies mentioned in this document or derivatives thereon. UBP may have a financial interest in the companies mentioned in this document, including a long or short position in their securities, and or options, futures or other derivative instruments based thereon.

© Press Release 2014