RWC to launch income share class on convertibles fund

Asset management firm RWC Partners is set to launch a distributing share class for its Global Convertibles bond fund run by Davide Basile.

The $1.2 billion fund, which Basile has been managing for three years, is launching the new share class as the need for income has increased in the low interest rate environment.

Basile, who heads the RWC global convertibles team, pointed out convertibles are useful due to their return potential and ability to protect against spikes in market volatility.

Basile said: ‘2013 should be a year of opportunities for both equities and convertible bonds.

‘The macro environment looks set to provide a favourable backdrop for convertibles as the asset class may be among the beneficiaries of the reallocation out of fixed income given the low duration combined with conservative equity exposure the product offers,' he said in a statement.

‘Although there are also some great prospects in equities we remain aware that there are going to be significant political events that could destabilise markets. The US sequester and Italian elections could create disruptions.’

Basile also expects a period of strong performance in Asia, while remaining cautious on Europe given the slower growth and political uncertainty.

‘The US is among our preferred regions as we have seen the beginning of the housing recovery, which is generally feeding into improved economic data,’ said Basile. ‘Furthermore, valuations are not stretched and over the last few years American corporations have improved balance sheets and become more efficient.

‘The last few earnings seasons have been broadly characterised by a declining top line and an improving bottom line; hence any uptick in revenue growth, which we feel is commencing, will result in significant earnings improvement.’

The RWC Global Convertibles fund has returned 13.54% in the three years to the end of January 2013. This compares to its Citywire benchmark, the UBS Global Convertible USD, which rose 23.06% over the same period.