The Case For Convertible Bond ETFs

August 31, 2017

The ETF market has a few strategies to offer investors looking to tap into equity upside through convertible bonds, funds like the First Trust SSI Strategic Convertible Securities ETF (FCVT), the iShares Convertible Bond ETF (ICVT) and the SPDR Bloomberg Barclays Convertible Securities ETF (CWB). Two of these funds are outperforming the SPDR S&P 500 Trust (SPY) this year: 

 

Chart courtesy of StockCharts.com

 

At the time of writing, Stringer Asset Management held ICVT and CWB among its universe of ETFs included in its suite of ETF Portfolios. Stringer Asset Management is a Memphis, Tennessee third-party investment manager and ETF strategist. Contact Stringer Asset Management at 901-800-2956 or at [email protected]. For a complete list of relevant disclosures, please click here.

Bloomberg Barclays U.S. Convertible Cash Pay Bond – This index represents the market of U.S. convertible bonds with outstanding issue sizes greater than $250 million. Convertible bonds are bonds that can be exchanged, at the option of the holder, for a specific number of shares of the issuer’s preferred stock or common stock.

MSCI ACWI (Net) Index – This index is a free-float-adjusted market-capitalization-weighted index designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI Index consists of 23 developed and 23 emerging market country indexes. Net total return includes the reinvestment of dividends after the deduction of withholding taxes, using a tax rate applicable to nonresident institutional investors who do not benefit from double taxation treaties.

 

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