Convertible Bonds the Answer for Stuck Stock Market

U.S. stocks have essentially been stuck in the past year while bond yields remain at rock bottom. If that's the case, why own convertible bonds which offer a little bit of both? 'With the return of volatility that we have seen, converts give you the opportunity to participate in the upside of the equity market and significantly limit the downside,' said Edward Silverstein, portfolio manager for the MainStay Convertible Fund (MCOAX) - Get Report . Silverstein added that they also offer an attractive yield right now of around three percent on average which is an attractive income in the current environment. One particular convertible bond Silverstein is positive on is a Hess Corporation (HES) - Get Report issue that he bought in February when it came to market. He said it has seen a nice run-up since then and he continues to believe in the story, along with its healthy eight percent yield. 'The company is well managed with a very good balance sheet. It's an investment grade company with very stable production primarily in the U.S. which has low political risk,' said Silverstein, adding that the stock can get to $75, up from $60 today, if oil prices continue to rise.