Ten years ago, convertible arbitrage was a niche product generally reserved for the proprietary accounts of large brokerage firms and hedge funds, and made up a small portion of secondary market trades. Today, many portfolios utilize a convertible arbitrage strategy, and it is estimated that convertible arbitrage trades represent more than half of the secondary market trading in convertible securities at the institutional level.

The object of the strategy is to create a low volatility asset class focused on the preservation of capital, while seeking to provide a consistent return above the risk-free rate.