CWB vs FCVT

CWBAState Street SPDR Bloomberg Convertible Securities ETF

FCVTCFirst Trust SSI Strategic Convertible Securities ETF

In short

CWB Convertible bonds are the hybrids of corporate credit: debt that can turn into stock. CWB has packaged them since 2009, tracking a Bloomberg index tilted toward the market's tradable issues, and it pays monthly.

FCVT Convertibles are a hybrid, quirky corner of the bond market, and this one hands the keys to a Los Angeles boutique that specializes in them. Active, global, no index to hug since 2015. Specialist judgment is the whole pitch, and you pay up for it.

Stated mandate

CWB The fund seeks to track the price and yield performance of the Bloomberg U.S. Convertible Liquid Bond Index before fees and expenses. It invests in qualifying U.S. convertible securities.

FCVT The fund is actively managed and seeks total return by investing at least 80% of net assets in a diversified portfolio of U.S. and non-U.S. convertible securities under normal market conditions.

Why people hold it

• CWB One holding, two jobs. Convertibles pay a coupon like bonds and convert into shares. You get roughly 400 of them for 0.40% a year, with distributions arriving monthly.
• The benchmark itself is picky about tradability: the Bloomberg U.S. Convertible Liquid Bond Index, as the name signals, leans toward the liquid end of a thinly traded market.
• Running since 2009 and now a multi-billion-dollar fund that trades actively. Tracking of its index has been tight, and the plumbing is among the sturdiest in its peer group.

• FCVT No index to follow. First Trust farms security selection out to SSI Investment Management, a Los Angeles firm built around convertible assets, equities and hedging strategies.sec.gov
• Global by mandate: at least 80% of net assets in U.S. and non-U.S. convertible securities, with total return as the stated objective rather than income alone.ftportfolios.com
• The prospectus also permits synthetic convertibles (an income piece plus a conversion component), so the manager can build hybrid exposure where no traditional convertible exists.ftportfolios.com
• Live since 2015 with a diversified book of roughly 130 positions and monthly distributions.

Worth knowing

• CWB Filed under fixed income, wired to equities. When the underlying stocks run, convertibles follow them up; when stocks sink, the swings look nothing like a core bond fund's.
• 0.40% is niche pricing. Broad index trackers in the same cohort run single-digit basis points (SCHK 0.03%, VT 0.06%), so you pay up for the convertible plumbing.
• Convertibles are a small corner of US credit. The investable pool is narrow (roughly 400 positions), so a handful of large issuers can shape the ride.

• FCVT That specialist team costs 0.95% a year, above the convertibles group median and several times index rivals ICVT (0.20%) and CWB (0.40%).
• Thinly traded next to the category's index heavyweights, which tends to mean wider spreads and more care needed on sizable orders.
• Convertibles track their underlying stocks, so this behaves more like equity risk than a plain bond fund, and synthetic positions add counterparty exposure.ftportfolios.com

Full CWB profile⁠

Full FCVT profile⁠