FCVT vs ICVT

FCVTCFirst Trust SSI Strategic Convertible Securities ETF

ICVTAiShares Convertible Bond ETF

In short

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.

ICVT Convertible bonds are corporate debt with a stock option attached. ICVT owns the plain-vanilla slice (cash-pay bonds, big issues only) by index, at 0.20% a year, the lowest fee among the handful of convertible ETFs on the market.

Stated mandate

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.

ICVT The fund seeks to track an index of U.S. dollar-denominated convertible bonds with issue sizes above $250 million.

Why people hold it

• 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.

• ICVT 0.20% a year, against a category median of 0.80%. The next-cheapest convertible ETF, CWB, charges 0.40%, and the active options in the group run 0.69% to 0.95%.
• Rules, not hunches: it follows the Bloomberg U.S. Convertible Cash Pay Bond >$250MM Index and has tracked it closely, with no manager discretion in the mix.ishares.com
• The index takes only cash-pay converts above $250 million in issue size, screening out zero-coupon, preferred and mandatory structures plus called and defaulted paper.sec.gov
• A multi-billion-dollar fund trading a few hundred bonds, running since 2015 and paying distributions monthly.

Worth knowing

• 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

• ICVT Converts move with the issuer's stock. The bond floor cushions, but this behaves more like an equity-sensitive hybrid than a core bond fund.sec.gov
• Convertible issuers are often unrated or below investment grade, so credit risk sits inside the portfolio alongside the rate risk.ishares.com
• Cash-pay only means no convertible preferreds or mandatories, so it is a clean core slice rather than the entire convertible market.sec.gov

Full FCVT profile⁠

Full ICVT profile⁠