“The fund’s sector concentration risk is partially offset by its high-credit-quality orientation. About 70% of its holdings are investment-grade companies, whereas the typical fund in the convertibles Morningstar Category has only a fourth of its portfolio invested in securities issued by BBB or higher-rated entities. The fund’s interest-rate-risk profile is on par with the category mean,” according to Morningstar.
Related: Treasury ETFs Still Have a Place in a Diversified Portfolio
Competitors to CWB, the dominant convertibles ETF include the iShares Convertible Bond ETF (BATS: ICVT). The iShares Convertible Bond ETF seeks to track the investment results of an index composed of U.S. dollar-denominated convertible securities, specifically cash pay bonds, with outstanding issue sizes greater than $250 million, according to iShares, the world’s largest ETF issuer.
“Propelled by its low fee and large allocation to technology bonds, the fund’s five-year annualized return of 11.4% through June 2017 surpassed the category group by 3 percentage points. This outperformance was principally driven by the fund’s high correlation to high-tech stocks,” said Morningstar regarding CWB.
For more on bond ETFs, ] visit our fixed income category.