Bestinvest says
The fund follows an unconstrained approach and selects holdings from the investment universe on a bottom-up basis. The manager does not take top-down views on the direction of the markets. He has the flexibility to pick stocks purely on their merits, without any pre-set geographical guidelines or limits set by macro or sector top-down views but with a view to the fund staying true to its 'at the money' mandate ie close to conversion.
Fund risk is managed by minimising the distance to the bond ‘floor’, the maximum loss that the convertible can suffer if the underlying share price declines, provided that credit quality does not deteriorate. The manager aims to keep the delta of the portfolio (the sensitivity to equity movements) within a range of 0.30-0.75. The manager may use derivatives to restructure the portfolio and to modify sensitivity to underlying equity price movements. The fund’s currency exposure is not hedged as the manager believes currency diversification improves returns over the long term. The fund has a bias to convertible bonds carrying an investment grade as opposed to a high yield rating.