SPDR Barclays Capital Convertible Securities ETF (NYSE:CWB) — This ETF invests at least 80% of its assets in the convertible securities of the Barclays U.S. Convertible Bond Index. Its holdings include Wells Fargo Convertible Preferred, General Motors Convertible, Intel Convertible 3.25% and Gilead Sciences Convertible bonds. It pays an annualized dividend of $1.62 for a current yield of 3.88%.
The securities in the fund are convertible under various terms into the shares of common stock, thus the securities will generally move with the market but have lower volatility. This investment may not have as high a return as a broad-based index but should provide some degree of downside protection because of its dividend yield and the more senior status as a holder of bonds versus stocks.
After a breakout from an ascending triangle at just under $40, CWB continued the advance by executing a breakaway gap, which was followed by a continuation gap at $40.40. It has been consolidating for almost a month, but a break above $42 should result in a continuation of its bull market advance.