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CXGCX at 5: Diversify Fixed Income, Hedge Equity Risk with Global Convertibles

The upcoming five-year anniversary (12/31/19) of Calamos Global Convertible Fund (CXGCX) comes as market participants are debating how long the U.S. bull equity market can last while lamenting today’s low-yield environment.

With risk management top of mind, the global diversification of CXGCX could be a timely strategy to effectively diversify fixed income and hedge equity risk going forward.

global convertible market is 65 percent larger than the us market

How Global Convertibles Are Different

Diversification with global convertible securities includes exposure to issues from other countries whose issuers in different sectors have different purposes for their issues’ proceeds.

nearly half of the index represents issues from outside the us

If you’re accustomed to the U.S. convertible market, you likely think of convertible bonds as more equity-like. Not surprisingly, across the world, the U.S. converts have the highest deltas. The average equity sensitivity (delta) of the global convertible market is 47% versus the U.S. convertible market’s delta of 65% (source: Bank of America Merrill Lynch).

This may be a reflection of the distribution of issuance by sector, as shown below. While technology was the leading sector in the U.S. market and across the board as of 11/30/19, there was a divergence of sector issuance in other regions, where the market was led by industrials and healthcare issues (Europe) or issues from the financials and consumer discretionary sectors (Asia).

global convertible issuance by sector

In addition, the purposes for using proceeds from the issuance of convertible securities tend to vary by region. As shown below, general corporate purposes and refi activity were the most common use of proceeds in the U.S. and Asia markets in 2019, whereas mergers & acquisitions (Europe) and buybacks (Japan) were more prevalent in other regions.

the use of proceeds from global convertibles varied by region

Global issuance (see chart below) has been strong despite lower interest rates. Through November 2019, global issuance reached $80 billion and is on pace to eclipse the $84.6 billion issued in 2018. While the U.S. accounts for most of the new issuance, Europe is also seeing a pick-up in deal volume.

global convertible issuance on pace to eclipse 2018

Benchmarking CXGCX Performance

CXGCX is one of a kind—the only U.S.-based global convertible fund. This can complicate benchmarking the fund’s performance, so we suggest keeping these considerations in mind:

  • Index Comparison: Within the global market environment, the fund has performed slightly behind the Thomson Reuters Global Convertible Index, primarily due to its significant underweight allocation to convertibles with the most (>80%) equity sensitivity. While lagging the index year to date and over the one-year period as of 11/30/19, it has outperformed the index for the three-year period. Year to date, CXGCX has captured 52% of the MSCI World equity index return while averaging only 48% equity sensitivity.

  • Category Comparison: CXGCX is one of 17 funds in the Morningstar Convertible Category—but the only one that is global. Because of CXGCX’s higher allocation to non-U.S. holdings, whose returns are more bond-like, a comparison solely to U.S. peers may not be helpful.


Data on the global convertible market is available to you regularly now via our new quarterly Calamos Global Convertible Market Snapshot.

Subscribe here.

Click here to view CXGCX’s standardized performance.

Advisors, could you use additional information about global convertible securities and how they’re used? For more information, please talk to your Calamos Investment Consultant at 888-571-2567 or

Before investing carefully consider the fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-800-582-6959. Read it carefully before investing.

An investment in the Fund(s) is subject to risks, and you could lose money on your investment in the Fund(s). There can be no assurance that the Fund(s) will achieve its investment objective. Your investment in the Fund(s) is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in the Fund(s) can increase during times of significant market volatility. The Fund(s) also has specific principal risks, which are described below. More detailed information regarding these risks can be found in the Fund's prospectus.

The principal risks of investing in the Calamos Global Convertible Fund include: equity securities risk consisting of market prices declining in general, growth stock risk consisting of potential increased volatility due to securities trading at higher multiples, foreign securities risk, emerging markets risk, currency risk, geographic concentration risk, American depository receipts, mid-size company risk, small company risk, portfolio turnover risk and portfolio selection risk. As a result of political or economic instability in foreign countries, there can be special risks associated with investing in foreign securities, including fluctuations in currency exchange rates, increased price volatility and difficulty obtaining information. In addition, emerging markets may present additional risk due to potential for greater economic and political instability in less developed countries.

The fund’s gross expense ratios as of the prospectus dated 3/1/2019 are as follows: A Shares 1.36%, C Shares 2.11% and I Shares 1.11%.

Performance data quoted represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted. Please refer to Important Risk Information. The principal value and return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance reflected at NAV does not include the Fund's maximum front-end sales load of 2.25%. Had it been included, the Fund's return would have been lower.

The BofA Merrill Lynch All U.S. Convertibles Index (VXA0) measures the return of all U.S. convertibles.

BofA ML Global 300 Convertible Index is a global convertible index composed of companies representative of the market structure of countries in North America, Europe and the Asia/Pacific region. Source ICE Data Indices, LLC, used with permission. ICE permits use of the ICE BofA ML indices and related data on an 'as is' basis, makes no warranties regarding same, does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the ICE BofA ML Indices or data included in, related to, or derived therefrom, assumes no liability in connection with the use of the foregoing and does not sponsor, endorse or recommend Calamos Advisors LLC or any of its products or services.

The MSCI World Index is a market capitalization weighted index composed of companies representative of the market structure of developed market countries in North America, Europe, and Asia/ Pacific region.

The Thomson Reuters Global Convertible Bond Index is designed to broadly represent the global convertible bond market.

Unmanaged index returns assume reinvestment of any and all distributions and, unlike fund returns, do not reflect fees, expenses or sales charges. Investors cannot invest directly in an index.

Morningstar Convertibles Category funds are designed to offer some of the capital appreciation potential of stock portfolios while also supplying some of the safety and yield of bond portfolios. To do so, they focus on convertible bonds and convertible preferred stocks. Convertible bonds allow investors to convert the bonds into shares of stock, usually at a preset price. These securities thus act a bit like stocks and a bit like bonds.

Delta is a measure of how much a convertible security’s value rises or falls for a given stock move.

Average annual total return measures net investment income and capital gain or loss from portfolio investments as an annualized average. All performance shown assumes reinvestment of dividends and capital gains distributions.


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