State Street Global Advisors filed paperwork with the Securities and Exchange Commission to offer a convertible securities ETF that’s global in scope, adding a new dimension to the potential exposure investors can have to bond markets.
The SPDR Barclays Capital Global Convertible Securities ETF will track the Barclays Global Covertible Bond >500MM Index, which historically has included, among other countries, Abu Dhabi, Australia, Austria, Belgium, France, Germany, the UK, Hong Kong, Hungary, India, Italy, Japan, Luxembourg, Malaysia, Norway, Portugal, Russia, Singapore, South Africa, south Korea, Spain, Sweden, Switzerland, Taiwan, and the United States. As of May 31, the index had about 237 securities, the filing said.
To be included in the Index a security must have an outstanding issue size greater than $500 million; be a non-called and non-defaulted security; have at least 31 days until maturity; and be a registered or a convertible tranche issued under Rule 144A of the Securities Act of 1933, as amended. The Index is rebalanced on a monthly basis, at the end of each month, the company said.
Convertible bonds offer investors a combination of both equity and fixed income securities. They typically yield less than regular bonds with a comparable maturity but, because they can be converted to stock, thier prices tend to appreciate more than those of non-convertible bonds.
SSgA already markets a U.S.-focused convertibles fund, the SPDR Barclays Capital Convertible Securities ETF (NYSEArca: CWB), which has more than $930 million in assets. PowerShares also markets a U.S.-focused security, the PowerShares Convertible Securities Portfolion (NYSEArca: CVRT). It has just over $10 million in assets.
SSgA said in the filing that the new global convertibles ETF might also invest in securities not included in the index, including derivatives, such as swaps.
SSga didn't name a ticker or the annual expense ratio the ETF would have.