Video: Using Convertible Securities to Hedge Against Rising Rates

In this video from CNBC, Calamos CEO John Calamos Sr. says markets will experience increased volatility as the threat of rising interest rates continues to hang over investors’ heads. High volatility often results in individual investors getting “whipsawed” out of the market at the wrong times, in Mr. Calamos’s opinion, but there is a way for investors to protect themselves. Investors can use convertible securities as a hedge against rising interest rates.

Mr. Calamos says he is finding “good converts” not only domestically, but outside the U.S., as well. Companies issue convertible bonds – bonds that are convertible into stock – to gain access to capital. Convertibles are issued at higher prices than regular equities but with lower coupons than regular bonds – it’s a “win-win” for companies, according to Calamos.

Add a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.