Convertible bonds are a type of corporate bond that allow investors the option to convert to equity at a set strike price above the current trading price of the company’s stock.
Since the bonds can be converted into stock of the issuer, convertibles are often more intimately correlated to equities than other segments of the bond market. But like bonds, convertibles promise coupon payments and return of principal at a set date.
SPDR Barclays Convertible Securities ETF
ETF Trends editorial team contributed to this post.