“Convertible-bond funds like CWB tend to behave like a lower-volatility, higher-yielding version of domestic large-cap equities,” Woodham said. “CWB is highly correlated to large-cap U.S. stocks, but its swings are less extreme.”
Nevertheless, there are still some lingering concerns over valuations as investors have pushed up convertible bond prices in their quest for yields. Consequently, the average yield on new convertible notes this year is down to 2.7% from 3.8% in 2011.
SPDR Barclays Convertible Securities ETF
For more information on the markets, visit our current affairs category.
Max Chen contributed to this article.