Hedge funds hold 74% of the U.S. convertible bond marketto date, according to a Greenwich Associates survey. Outright equity-oriented investors held 13% of the U.S. convertibles market, dedicated outright convertible funds held 11%, and outright fixed-income investors held 2%, according to the survey.
In the European convertibles market, however, hedge funds held 64%, dedicated outright convertible funds held 33%, outright fixed income funds held 2% and outright equity investors held 1%.
Greenwich reported that portfolios of U.S. convertibles overall are fairly evenly split between investment grade bonds (54%) and below-investment grade bonds (46%).
Greenwich found that the average institutional investor increased its holdings in U.S. long market value convertibles to $1.6 billion for the year ended April 30, up from $1.2 billion the previous year.
Hedge fund investors in U.S. convertibles increased leverage ratios to 2.8, up from 2.1 last year but less than the 3.1 ratio reported by survey participants in 2002.