Weekly Digest – Convexity complexities

 In Weekly Digest

Slow economic growth, subdued inflation, mature business cycle, political risks, unfavourable demographics: the backdrop to today’s equity markets is challenging and adding convexity to portfolios can prove to be a highly valuable defensive solution. Be it via options, convertible bonds, tactical tilts or any other method and tool available, this must be managed carefully though. Increasing convexity imprudently can prove ineffective and expensive, but making wise use of it can reduce risks, smoothen the journey towards the investor’s objective and enhance returns over time.

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