Convertible securities underperformed equities in Q4 2025. The ICE BofA US Convertible Index returned 1.97% versus the S&P 500's 2.66% gain. Invesco's convertible fund lagged its benchmark, hurt by weakness in industrial holdings and underweight technology exposure. However, the convertible market showed strength with robust new issuance totaling $36.2 billion as companies sought cheaper financing alternatives. Convertibles offer a unique hybrid approach, combining equity upside potential with fixed income downside protection. They provide lower interest rate sensitivity than traditional bonds and potentially lower volatility than pure equities, making them attractive for diversified portfolios in uncertain market conditions.