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4 Weird Bond ETF Picks for Yield Amid Rising Interest Rates

Look beyond broad bond ETF investments like BND and AGG

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4 Weird Bond ETF Picks for Yield Amid Rising Interest Rates

Weird Bond ETF Picks: SPDR Barclays Capital Convertible ETF (CWB)

StateStreetSPDR185 4 Weird Bond ETF Picks for Yield Amid Rising Interest RatesBond ETF Yield: 3.67%

While preferred stock has been widely adopted by the general investing public, convertible bonds have been largely ignored by portfolios. That’s a real shame, as the asset class can offer plenty of benefits amid rising interest rates.

See, convertibles are basically a bond with a stock option hidden inside. That option provides the issuer the ability to exchange the bond for shares of its own stock under certain conditions — generally when the price of the stock hits a certain point.

Historically, when interest rates surge — and borrowing costs rise — many issuers will convert their bonds … just as the stock markets swoon. That provides a nice total return for investors in their convertibles.

The only real way to play convertibles via ETFs is through the SPDR Barclays Capital Convertible ETF (CWB). Despite having over $2 billion in assets, CWB is still pretty ignored by the general investing public. That’s a shame because the basket of 101 different convertibles in this bond ETF has put up an impressive 14.78% annual return since 2009.

Meanwhile, CWB currently yields a market beating 3.67% distribution yield. And this bond ETF can be yours for a low expense ratio of 0.40%, or $40 per $10,000 invested.


Article printed from InvestorPlace Media, http://investorplace.com/2014/01/bond-etf/.

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