Calamos Global Convertible I EUR Acc

Analyst Report
Morningstar's Take

by Elbie Louw
Calamos Global Convertible is led by an experienced team following a conventional approach, but turnover in the analyst ranks and expensive fees limit the strategy’s appeal.

Lead manager Eli Pars and comanager John Hillenbrand bring more than 30 years of industry experience each and serve as Calamos’ co-heads of convertible strategies. They oversee security selection and portfolio strategy and assist with the firm’s macro framework. However, within the 11-member analyst team that supports the fund, analyst turnover bears watching. This is particularly true within the technology sector, a favorite hunting ground of the managers that has sometimes accounted for 30% of the portfolio’s assets. The three-strong tech sector analyst team saw two departures in the past four years, with replacement hires joining in 2021 and 2023.

This team's standard investment framework focuses on credit and equity analysis. Analysts determine each issue’s bond floor and growth prospects and examine the convertible structure. Most convertibles in the portfolio are balanced (having both equitylike and bondlike characteristics) which is typical of peers in the global convertible bond Morningstar Category. The team may also use synthetics, a combination of a corporate bond and a listed call option (a bet that the company's stock will appreciate), to get exposure to maturities or yields that aren't readily available in the convertibles market.

The fund has typically performed well when global equity markets rise, thanks to the team's moderately aggressive approach. Pars’ decision to focus the bulk of the portfolio in the technology sector paid off in recent years as tech names largely outperformed the rest of the market. Its more recent results have been middling against the benchmark as equity markets turned more bearish. While the team bested roughly 90% of peers on an absolute and risk-adjusted basis during the trailing five years through October 2023, the fund trailed its benchmark over the same period. Longer-term, the Refinitiv Global Convertible Bond Index has proved a formidable opponent for active managers, and outside of exceptional periods like the pandemic recovery rebound, we believe it will be difficult for this fund to make a meaningful difference given its fees.
Morningstar Medalist Rating™Long-term prospects of beating the index in this universe remain a challenge.
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