Lazard announces launch of Global Convertibles Recovery Fund

LONDON, 24 August 2020 – Lazard Asset Management Limited today announced the launch of the Lazard Global Convertibles Recovery Fund. The Fund is actively managed using an investment strategy designed primarily to identify convertible bonds that are likely to experience recovery in their valuations. It will specifically seek investment opportunities presented by sectors or regions that have been underperforming or that are undervalued from either a credit or equity standpoint. The Fund also seeks to invest in new convertible bond issues that are eligible for investment by UCITS.

Convertible bonds’ pattern of return is known as “convex”, meaning they can offer equity market participation in a bullish environment and downside protection when equity markets are falling. The Fund will aim to take full advantage of this convexity with an anticipated annualized yield of more than 6.0%.

"The current market distortions make a convertible recovery strategy attractive for investors, who can benefit from convertible bonds that are undervalued," said Arnaud Brillois, Managing Director, Portfolio Manager/Analyst at Lazard Asset Management. "Sectors that have been heavily impacted by the downturn are likely to use convertible bonds as their primary financing instrument since convertible bond coupon payments are relatively low, making issuance attractive in times of widening credit spreads. Further, convertible bonds have an embedded call option, so issuers receive a higher price when volatility is high, creating additional incentive for companies to issue convertible bonds."

The Fund will be managed by the same team of portfolio managers and analysts who run $5.4 billion1 in assets across Lazard's Global Convertibles Strategies. The investment team employs a fundamental, bottom-up approach that uses rigorous qualitative and quantitative analysis to drive security selection, complemented by a top-down process that guides tactical positioning.

The Fund is initially registered for sale in the UK and Ireland.