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| More on the Upside Than the Downside |
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Investors looking for portfolio diversification may want to consider convertible securities, which provide the upside potential of equity returns and the downside cushion of dividend income. The MacKay Shields Convertible Securities investment team's disciplined approach to identify convertible securities that are expected to generate 60%-80% of the underlying equity's price appreciation, but only 30%-50% of its downside has led the Portfolio to perform well in both rising and declining markets.
In fact, over the last 10 years, the MacKay Shields Convertible Securities Portfolio has outperformed the S&P 500 Index nearly 60% of the time on a quarterly basis with less risk.1
MacKay Shields Convertible Securities Portfolio
Past performance is no guarantee of future results, which will vary. The returns presented herein are gross and do not reflect the deduction of investment advisory fees. The investment advisory fees and any other expenses the client may incur in the management of its account will reduce a client's return. The S&P 500 Index is an unmanaged index widely regarded as the standard for measuring large-cap U.S. stock market performance. An investment cannot be made directly into an index.
Percent of Upside/Downside Participation of S&P 500 Index Returns
| 20002 |
20012 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
0% of
Downside |
23% of
Downside |
28% of
Downside |
78% of
Upside |
67% of
Upside |
160% of
Upside |
56% of
Upside |
242% of
Upside |
Growth of $100,000 investment over 10 years ending 12/31/07
| MacKay Shields Convertible Securities Portfolio |
$230,284 |
| S&P 500 Index |
$177,563 |
| Merrill Lynch All Convertible Index |
$198,465 |
| Lehman Aggregate Bond Index |
$178,637 |
| Cash (Merrill Lynch 3-month T-Bill) |
$144,270 |
How could an investment in the MacKay Shields Convertible Securities Portfolio end up with a higher dollar value than an identical hypothetical investment in the S&P 500 Index when the Portfolio outperformed the S&P 500 Index about 60% of the time?
A MacKay Shields Convertible Securities Portfolio investor would have had more money because, while the Portfolio captured more than half of the gains the S&P 500 experienced, it also assumed less than half of the declines as the S&P 500.
Where Do Convertibles Fit in an Asset Allocation Plan?
The Portfolio managers seek to employ an active equity-oriented convertible investment strategy that provides participation in equity markets, while emphasizing downside protection. Therefore, this convertible portfolio is appropriate for either the equity or fixed-income portion of an asset allocation plan.
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