Investors have watched history being made this year, with the S&P 500 logging one of its worst first quarters (down -19.6%) only to be followed by one of its best (20.5%) in the second quarter. Stocks climbed back from a 34% low point in March to break even for the year by July 14. And, as of August 18, the S&P completed the quickest peak to recovery (126 days) in its history (see this post).

However, given their concerns about extreme market volatility and continued uncertainty about the effect of COVID-19, many investors have been watching from the sidelines. The 12-month net flow into mutual funds and ETFs, adjusted for inflation, is on par with the level of selling produced by the Great Financial Crisis.

selling is on par with the level of selling during the great financial crisis

Your clients need you and the benefit of what you know now more than ever.

If consistent diversified exposure to equities is in your clients’ best interests, here’s how we can help. Calamos offers a range of options for clients who belong somewhere between cash and being all-in the market.

Alternatives to Manage Risk, Enhance Diversification

Consider the Calamos liquid alternative funds, which are designed to manage risk and enhance diversification. Equity liquid alternatives Calamos Hedged Equity Fund (CIHEX) and Calamos Phineus Long/Short Fund (CPLIX) seek to capitalize on up and down market moves. They provide equity exposure, with more tools for managing risks.

On the fixed income side of an asset allocation, our Calamos Market Neutral Income Fund (CMNIX) can serve as a volatility dampener—which is how it worked during the Feb. 20 to March 23 drawdown.

The fund combines two complementary strategies with different responses to volatility: convertible arbitrage seeks alpha and uncorrelated returns, while hedged equity potentially provides income from options writing and upside participation. One of the oldest liquid alts and the largest (Morningstar data, 6/30/20), CMNIX is valued for its resilience to equity market declines and performance consistency.

Our alts’ performance during this year's swoon and snapback (see this post) is just the latest demonstration of their historical long-term effectiveness at mitigating downside risk. The shallower your clients’ participation in a drawdown, the likelier they are to remain invested, and the quicker their portfolios can get back to growing.

TOP-PERFORMING CALAMOS FUNDS
8/31/2020
 
Top Quartile
Category Rank I Shares
Shading denotes top quartile
CLASS I SHARES AS OF 8/31/20 Morningstar Category Overall Morningstar Rating YTD
1/1/2020-8/31/2020
1-year
9/1/2019-8/31/2020
3-year
9/1/2017-8/31/2020
5-year
9/1/2015-8/31/2020
ALTERNATIVE
Calamos Market Neutral Income Fund (CMNIX) Market Neutral
5 Stars
30 25 21 7
Number of funds 95 108 108 95 74
Calamos Hedged Equity Fund (CIHEX) Options-based
5 Stars
22 29 13 8
Number of funds 113 205 186 113 69
Calamos Phineus Long/Short Fund (CPLIX) Long-Short Equity
2 Stars
51 67 70 N/A
Number of funds 180 211 208 180 N/A

Past performance is no guarantee of future results. Morningstar category rank is based on average annualized returns since I share inception.

8/31/20 3 years # of funds 5 years # of funds 10 years # of funds
CMNIX Inception: 5/10/00
4 Stars
95
5 Stars
74
5 Stars
20
CIHEX Inception: 12/31/14
5 Stars
113
5 Stars
69 N/A N/A
CPLIX Inception: 5/01/02
2 Stars
180 N/A N/A N/A N/A

Convertibles: Comparable Equity Returns But with Less Volatility

Over time, actively managed convertibles have delivered comparable equity returns but with less volatility. This was demonstrated by Calamos Founder, Chairman and Global Chief Investment Officer John P. Calamos, Sr. more than 40 years ago in his pioneering work in using convertible securities to manage risk and returns.

Convertibles’ hybrid characteristics make them a compelling choice for strategic allocations that pursue lower-volatility equity exposure. If the markets vacillate back and forth, converts provide an effective way to stairstep through the volatility. If there’s a V-shaped recovery, converts stand to gain a significant amount of the upside.

Illustrating a proven record of enhanced returns and managed equity risk, Calamos Convertible Fund (CICVX) enjoyed a 14.40% return year-to-date through June 30 while the S&P 500 closed the first half of 2020 still in negative territory (-3.08%).

It was a period that Calamos believes once again demonstrated the value of active management as CICVX’s gain was nearly twice that of the ICE BofA All U.S. Convertibles Index (VXA0) (7.25%).

cicvx year to date outperformance vs equity and convertible markets

If the market experiences further declines, we believe that convertibles are positioned to do what advisors need them to do—hold up relative to their underlying equities.

One caution about this environment: Active management including rebalancing is key, given that so much of the market is unrated and the sharp equity declines created more busted converts. The Calamos credit process and years of convertible securities expertise takes on added value at this time.

Convertibles can be included in an asset allocation in a dedicated strategy (Calamos Convertible Fund [CICVX]), or in combination with equities (Calamos Growth and Income Fund [CGIIX]). For non-U.S. investing, consider Calamos Global Convertible Fund (CXGCX), Calamos Global Growth and Income Fund (CGCIX) and Calamos Evolving World Growth Fund (CNWIX).

Advisors, let us help keep your clients invested. For more information, contact your Calamos Investment Consultant at 888-571-2567 or caminfo@calamos.com.

Resources For Financial Advisors

Contact Us

Call 888-571-2567
or
Email caminfo@calamos.com
Use Zephyr on-demand (go to Financial Advisor site) to run your own analysis of Calamos alternatives and convertible-using funds, including reports on performance and risk analysis, peer group analysis, style attribution and more.

The Latest About Calamos Liquid Alternatives

The Latest About Calamos Convertibles

what happened this week in liquid alts?
what happened this month in convertibles?

Click here to view CMNIX's standardized performance.

Click here to view CPLIX's standardized performance.

Click here to view CIHEX's standardized performance.

Click here to view CICVX's standardized performance.

Click here to view CGIIX's standardized performance.

Click here to view CGCIX's standardized performance.

Click here to view CNWIX’s standardized performance.

Click here to view CXGCX’s standardized performance.

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.

PLS average annual returns table and expense ratio

MNI average annual returns table and expense ratio

HEF average annual returns table and expense ratio

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.

Alternative investments may not be suitable for all investors, and the risks of alternative investments vary based on the underlying strategies used. Many alternative investments are highly illiquid, meaning that you may not be able to sell your investment when you wish to.

Some of the risks associated with investing in alternatives may include hedging risk – hedging activities can reduce investment performance through added costs; derivative risk- derivatives may experience greater price volatility than the underlying securities; short sale risk - investments may incur a loss without limit as a result of a short sale if the market value of the security increases; interest rate risk – loss of value for income securities as interest rates rise; credit risk – risk of the borrower to miss payments; liquidity risk – low trading volume may lead to increased volatility in certain securities; non-U.S. government obligation risk – non-U.S. government obligations may be subject to increased credit risk; portfolio selection risk – investment managers may select securities that fare worse than the overall market. Alternative investments may not be suitable for all investors.

Class I shares are offered primarily for direct investment by investors through certain tax-exempt retirement plans (including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans, defined benefit plans and non-qualified deferred compensation plans) and by institutional clients, provided such plans or clients have assets of at least $1 million. Class I shares may also be offered to certain other entities or programs, including, but not limited to, investment companies, under certain circumstances.

The principal risks of investing in the Phineus Long/Short Fund include: equity securities risk consisting of market prices declining in general, short sale risk consisting of potential for unlimited losses, foreign securities risk, currency risk, geographic concentration risk, other investment companies (including ETFs) risk, derivatives risk, options risk, and leverage risk.

The principal risks of investing in the Market Neutral Income Fund include: equity securities risk consisting of market prices declining in general, convertible securities risk consisting of the potential for a decline in value during periods of rising interest rates and the risk of the borrower to miss payments, synthetic convertible instruments risk, convertible hedging risk, covered call writing risk, options risk, short sale risk, interest rate risk, credit risk, high yield risk, liquidity risk, portfolio selection risk, and portfolio turnover risk.

The principal risks of investing in the Hedged Equity Fund include: covered call writing, options, equity securities, correlation, mid-sized company, short sale, interest rate, credit, liquidity, portfolio selection, portfolio turnover, foreign securities, American depository receipts, and REITS.

Convertible Securities Risk — The value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also, may have an effect on the convertible security’s investment value. Convertible Hedging Risk — If the market price of the underlying common stock increases above the conversion price on a convertible security, the price of the convertible security will increase. The fund’s increased liability on any outstanding short position would, in whole or in part, reduce this gain. Covered Call Writing Risk — As the writer of a covered call option on a security, the Fund foregoes, during the option’s life, the opportunity to profit from increases in the market value of the security, covering the call option above the sum of the premium and the exercise price of the call. Options Risk — The Fund’s ability to close out its position as a purchaser or seller of an over-the-counter or exchange-listed put or call option is dependent, in part, upon the liquidity of the option market. There are significant differences between the securities and options markets that could result in an imperfect correlation among these markets, causing a given transaction not to achieve its objectives. The Fund’s ability to utilize options successfully will depend on the ability of the Fund’s investment adviser to predict pertinent market movements, which cannot be assured. Equity Securities Risk — The securities markets are volatile, and the market prices of the Fund’s securities may decline generally. The price of equity securities fluctuates based on changes in a company’s financial condition and overall market and economic conditions. If the market prices of the securities owned by the Fund fall, the value of your investment in the Fund will decline. Short Sale Risk — The Fund may incur a loss (without limit) as a result of a short sale if the market value of the borrowed security increases between the date of the short sale and the date the Fund replaces the security. The Fund may be unable to repurchase the borrowed security at a particular time or at an acceptable price.

The principal risks of investing in the Calamos Convertible Fund include: convertible securities risk consisting of the potential for a decline in value during periods of rising interest rates and the risk of the borrower to miss payments, synthetic convertible instruments risk consisting of fluctuations inconsistent with a convertible security and the risk of components expiring worthless, foreign securities risk, equity securities risk, interest rate risk, credit risk, high yield risk, portfolio selection risk and liquidity 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 principal risks of investing in the Calamos Growth and Income Fund include: convertible securities risk consisting of the potential for a decline in value during periods of rising interest rates and the risk of the borrower to miss payments, synthetic convertible instruments risk consisting of fluctuations inconsistent with a convertible security and the risk of components expiring worthless, equity securities risk, growth stock risk, small and mid-sized company risk, interest rate risk, credit risk, liquidity risk, high yield risk, forward foreign currency contract risk and portfolio selection risk.

The principal risks of investing in the Calamos Global Growth and Income Fund include: convertible securities risk consisting of the potential for a decline in value during periods of rising interest rates and the risk of the borrower to miss payments, synthetic convertible instruments risk consisting of fluctuations inconsistent with a convertible security and the risk of components expiring worthless, foreign securities risk, emerging markets risk, equity securities risk, growth stock risk, interest rate risk, credit risk, high yield risk, forward foreign currency contract risk, portfolio selection risk, and liquidity 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 principal risks of investing in the Calamos Evolving World Growth 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, convertible securities risk consisting of the potential for a decline in value during periods of rising interest rates and the risk of the borrower to miss payments, 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 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.

Morningstar Market Neutral Category represent funds that attempt to eliminate the risks of the market by holding 50% of assets in long positions in stocks and 50% of assets in short positions.

Morningstar Options-Based Category represents funds that generate a significant portion of their returns from the collection of premiums on options contracts sold.

Morningstar Long/Short Equity Category funds take a net long stock position, meaning the total market risk from the long positions is not completely offset by the market risk of the short positions. Total return, therefore, is a combination of the return from market exposure (beta) plus any value-added from stock-picking or market-timing (alpha).

Morningstar RatingsTM are based on risk-adjusted returns for Class I shares and will differ for other share classes. Morningstar ratings are based on a risk-adjusted return measure that accounts for variation in a fund’s monthly historical performance (reflecting sales charges), placing more emphasis on downward variations and rewarding consistent performance. Within each asset class, the top 10%, the next 22.5%, 35%, 22.5%, and the bottom 10% receive 5, 4, 3, 2 or 1 star, respectively. Each fund is rated exclusively against U.S. domiciled funds. The information contained herein is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Source: ©2020 Morningstar, Inc. All rights reserved.

S&P 500 Index-Is generally considered representative of the U.S. stock market.

The ICE BofA All U.S. Convertibles Index (VXA0) comprises approximately 700 issues of only convertible bonds and preferreds of all qualities. Source ICE Data Indices, LLC, used with permission. ICE permits use of the ICE BofA 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 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.

Alpha is a measurement of performance on a risk adjusted basis. A positive alpha shows that performance of a portfolio was higher than expected given the risk. A negative alpha shows that the performance was less than expected given the risk.

801982 420