The Perfect Investment for Anyone Planning to ‘Go Away’

by Sam Collins | April 30, 2013 1:29 am

SPDR Barclays Capital Convertible Securities ETF (NYSE:CWB[1]) — 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 $1.61 for a current yield of 3.77%.

The securities in the fund are convertible under various terms into the shares of common stock, thus they will generally move with the market but have less volatility.

I first recommended CWB in the Trade of the Day[2] on Feb. 20, at $41.76, saying, “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.” And I noted, “A break above $42 should result in a continuation of its bull market advance.”

On Monday, CWB broke to a new closing high of $42.98. The ETF should continue heading north while providing an attractive yield. This is an excellent investment for those investors who plan to “sell in May” and are looking for a place to house their capital until October.

CWB Chart
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Trade of the Day Chart Key[3]

  1. CWB:
  2. Trade of the Day:
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