“The spectrum of actively managed convertibles funds leads to a lot of different returns,” notes Mazza. “We see clients leaving active funds for CWB. The average fee on an actively managed convertibles fund is at least double that of CWB.”
CWB, the lone dedicated convertibles ETF on the market today, charges 0.4% per year.
Speaking of arrivals to CWB, which could be a sign some investors are expecting interest rates to rise, there have been plenty this year. The ETF, an expected area of growth for State Street, the second-largest U.S. ETF sponsor, has delivered on that promise. CWB now has nearly $3 billion in assets under management after pulling in $771.3 million in new assets this year.
That is better than the combined $3.8 billion pulled from the two largest junk bond ETFs. Adding some validity to the notion that investors have dumped small-caps in favor of CWB, the iShares Russell 2000 ETF (NYSEArca: IWM) has lost $2.2 billion while lagging CWB in terms of performance.
SPDR Barclays Convertible Securities ETF
Tom Lydon’s clients own shares of IWM.