While CWB has been crimped by widening spreads and concerns about a high-yield sell-off, it should be noted that while 34% of the ETF’s holdings carry junk ratings, another 34% are rated A or Baa.
Investors are displaying faith in the durability of CWB, which could be a sign the recent pullback in stocks is temporary. While investors pulled money from the major junk bond ETFs during the third quarter, CWB added $125.5 million in new assets.
“Despite the recent negative performance, we remain bullish going into 2015. SSgA expects US economic growth to accelerate to 3% next year, well above this year’s expected growth of 2.1%. In addition, we expect rates to rise as US growth continues to pick up. By Q4 2015, we expect the US 10 Year Treasury yield to rise 87 bps to 3.15%. This highlights that while it’s tempting to head for the bunkers, investors should still prepare their portfolios for this expected rise in rates,” said Mazza. [Time to Revisit the Convertibles ETF]
SPDR Barclays Convertible Securities ETF
