In February, ride-sharing company Lyft issued $460 million of convertible bonds due in 2029 that pay 0.625% a year. With rate cuts in sight and small-caps outperforming major indexes, everyday investors are warming back up to convertible bonds, too. Convertible bonds give investors a way to get in on big potential returns, while protecting their principal. An ICE BofA index of convertible bonds returned 3.2% this year, outpacing investment-grade bonds and broader fixed income. Convertible bonds also tend to be more vulnerable than traditional bonds to stock-market downturns.

Source: Wall Street Journal July 27, 2024 12:57 UTC