Calamos Global Convertible I EUR Acc

Analyst Report
Morningstar's Take
|13/12/2021

by Mara Dobrescu, CFA


Calamos Global Convertible utilizes a conventional approach that has been well executed in recent years. Experienced managers lead this team, but turnover in the analyst ranks and expensive fees limit the strategy’s appeal. The majority of the fund’s share classes earns a Morningstar Analyst Rating of Neutral, while the more-expensive C share class earns a Negative rating. Lead manager Eli Pars and John Hillenbrand bring more than 25 years of industry experience each and serve as co-heads of convertible strategies. They oversee security selection and portfolio strategy, and assist with the firm’s macro framework. A team of 11 analysts supports this fund, but as a result of both expansion and turnover, average tenure within this group is just three years, less than other groups we cover. This team’s standard investment framework focuses on credit and equity analyses. Analysts determine the issuer’s bond floor and growth prospects, and examine the convertible structure. Most convertibles are balanced (having both equity-like and bond-like characteristics) which is typical of peers in the global convertibles 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), in order to get exposure to maturities or yields that aren’t readily available in the convertibles market. Synthetics which have at times reached around 10% of the portfolio, but the opportunities for such trades depend largely on market conditions (as of October 2021, a single synthetic position accounted for less than 1% of assets). The fund should perform well when global equity markets rise, thanks to the team’s moderately aggressive approach, and Pars’ decision to focus the bulk of the portfolio in the technology sector has paid off in recent years as tech names largely outperformed the rest of the market. In 2020, its early drawdown was similar to peers’ but the fund rebounded sharply in the third quarter thanks to bold bets in COVID-19-hit names such as airlines and cruise operators. Its more recent results have been middling against the benchmark, however, as the overexposure to technology was compensated by mixed security selection in the sector. Longer-term, the Refinitiv Global Convertible Bond index has proved to be a formidable opponent for active managers, and outside of exceptional periods like the COVID-19-recovery rebound, we believe it will be difficult for this fund to make a difference given its fees.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleSpecialty.
Morningstar Pillars
PeopleAverage
A large research group, though with limited tenure on the analyst side.
ParentAverage
Trending in the right direction.
ProcessAverage
A standard approach, but well executed in recent years.
Performance
Strong returns over the past two years have improved the fund’s record.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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In order to provide consistency across the report data provided by different Asset Managers, the calculated data points presented are generated using Morningstar’s proprietary calculation methodology which is set out in more detail at(https://www.morningstar.com/research/signature)