The stock-market selloff and interest rate uncertainty have many investors wondering where to stash their money. One oft-overlooked place is convertible bond funds."At this point nobody knows where the bottom is," says Edward Silverstein, portfolio manager of the MainStay Convertible ( MCOAX) fund. "During times like these, convertibles protect you on the downside and, when stocks eventually rally again, they allow you to join in the upside." The S&P 500 is down 12.5% this year, while the average convertibles fund is off only 4.75%, according to fund tracker Morningstar. In the bull market of 2003, the average convertible bond fund returned 26.6%, compared with 28.7% for the S&P 500. In other words, converts delivered 93% of the upside of the stock market. Meanwhile, when the stock market sank in 2002, convert funds fell just 8% for the year vs. 22% for the index, which is only 36% of the decline. Silverstein's fund, down 4.8% this year, has returned an average of 8.5% annually over the past three years, over two full percentage points better than the average convertibles fund, and more than double the S&P's annualized return of 4.1%. Convertible bonds, or converts, are part bond and part stock. They are typically three-year corporate bonds that pay interest but give you the option to take your principal in cash or a set number of shares of the issuer's stock at maturity (thus "converting" the bond to stock). The terms of the deal -- how much interest you earn, when the bond matures and how many shares of stock you can get at maturity -- are set when the company issues the bond.