Convertible Bond ETFs Look Good if Fed Hikes Rates

The $372.4 million ICVT holds 204 convertibles, nearly 44% of which are issued by technology companies. Consumer discretionary and staples issues combine for over 27% of the ETF’s weight.

“Additionally, with many investors focused on credit risks, particularly in high yield, convertibles may be more favorable relative to spread products. Historically, convertibles have had lower default rates than high yield bonds, according to research from Barclays,” notes BlackRock.

Over 30% of ICVT’s issues are rated BB, B or CCC and over half the ETF’s issues are not rated.

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