In January 2021, Palisade Capital Management published a research piece entitled “The Time For Convertibles Is (Still) Now”, where we outlined the advantages of investing in the convertible asset class, both historically and tactically, given an impending, post COVID-19 economic cycle.
In this study, we seek to touch upon and update key aspects of Palisade's unique approach to investing in convertibles. Palisade's convertible strategies emphasize Growth convertibles (as opposed to Value convertibles) and Large- and Mid-Capitalization convertibles (rather than Small-Capitalization convertibles).
We believe 2021 will be another favorable year for convertibles and remain a compelling asset class, especially for those that have re-examined their allocation framework and appetite for risk given the rollercoaster ride of 2020.
We believe convertible securities, which complement other alpha-seeking strategies within a portfolio, have always been an attractive asset class and should play a vital role in strategic allocations during these unprecedented times.
The first issue of Palisade's new Deep Dive Series explores small-cap banks. The banking industry is at the heart of the American economy, and small-cap banks are at the intersection of Wall Street and Main Street.
As investors search for solutions to help meet their risk and return objectives in these uncertain times, Palisade believes concentrated equity portfolios of high-quality issuers offer a compelling approach to achieve long-term investment objectives. Investors should not underestimate the role of individual companies within a portfolio or believe all risk can be avoided through diversification. Instead, investors seeking long-term return should consider allocating some portion of their assets to concentrated strategies that allow individual companies to drive portfolio performance.
The composition of the small cap growth and value benchmarks within small cap equities has evolved and created an often-overlooked pitfall – the potential for unwanted industry concentration and portfolio exposures. Palisade believes that active small cap core equity investing represents a better solution. For the detailed analysis, please download our latest white paper.