Supply and demand scenario is poor for convertible bonds


Investor redemptions could prove a problem for convertible bond arbitrage managersif there is no pick-up in returns in the fourth quarter, according to a fundof fund manager specialising in the arbitrage strategy.

Charles Hovenden, portfolio manager of The Absolute Fund, which is invested approximatelyhalf in arbitrage-related strategies and half in equity long/short funds, saysmany fund managers are anticipating a fourth quarter pick-upin market volatility.

“The fall in implied volatilities in

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