Convertible securities are a sort of hybrid between fixed-income and equities that provide current income but also have the ability to capture capital appreciation through conversions. In this way they offer some of the upside of the equity markets but mitigate the downside.
First Trust sees the shifting economic climate as an opportunity for convertible securities to offer investors a solid total return investment options while staying active in equity returns, current income, and also protecting their principal.
According to the prospectus, convertible securities have historically outperformed in rising rate environments. [New Convertible Bond ETF Comes to Market]