Moneyspider in the News
19/06/2007
F&C highlights benefits of convertible bonds
London Stock Exchange
An expert at F&C Management has highlighted the benefits of convertible bonds for investors, arguing that they offer an appealing compromise between bonds and equities in a climate of rising interest rates.
Anja Eijking argued that relatively low returns on conventional corporate bonds and ongoing concern surrounding a correction in equity markets makes convertibles an appealing prospect for new and existing investors.
With mounting pressure on equity markets and a wide expectation of a general correction before the end of 2007, there is a level of optimism over convertibles in the longer term.
"Convertible bonds offer investors peace of mind by giving them security of income through regular bond coupons whilst at the same time offering exposure to equity market returns with the option to convert the bonds to shares on maturity," explains Ms. Eijking.
In addition, convertibles pay the fixed face value of the bond irrespective of any decline in the equity option.
Research from Moneyspider warns that corporate bonds can be risky for investors despite often being sold to low-risk investors.
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