First Trust Advisors L.P., begun trading the First Trust SSI Strategic Convertible Securities ETF (NASDAQ: FCVT) on Wednesday, November 04, 2015.
Here is a synopsis of the new ETF:
|Symbol: FCVT||Exchange: Nasdaq|
|Name: First Trust SSI Strategic Convertible Securities ETF||Net Expense Ratio: 0.95%|
The First Trust SSI Strategic Convertible Securities ETF is an actively managed exchange-traded fund that seeks to deliver total return by investing, under normal market conditions, at least 80% of its net assets in a diversified portfolio of U.S. and non-U.S. convertible securities.
The Fund may invest in the following convertible securities:
• Convertible and exchangeable notes, bonds and debentures;
• Convertible preferred securities;
• Mandatory convertible securities (Conversion is not optional for these convertible securities, which automatically convert on maturity.);
• Contingent convertible securities (These convertible securities may provide for conversion under certain circumstances, including, for example: if a company fails to meet the minimum amount of capital described in the security; if the company’s regulator makes a determination that the security should convert; or if the company receives specified levels of extraordinary public support. Additionally, contingent convertible securities may contain features that limit an investor’s ability to convert the convertible security into its underlying security unless certain conditions are met, including, for example, when the sale price of the underlying security exceeds the conversion price by a specified percentage for a certain specified period of time.);
• Synthetic convertible securities (These convertible securities (a) consist of two or more distinct securities whose economic characteristics, when taken together, resemble those of traditional convertible securities (i.e., an income-producing security and the right to acquire an equity security (through, for example, an option or a warrant)); or (b) are exchangeable or equity linked securities issued by a broker-dealer, investment bank or other financial institution with proceeds going directly to the broker-dealer, investment bank or other financial institution, as applicable, that have economic characteristics similar to those of traditional convertible securities.);
• Corporate bonds and preferred securities with attached warrants; and
• Convertible securities that are eligible for purchase and sale pursuant to Rule 144A under the Securities Act of 1933, as amended (the “1933 Act”) (such as, for example, convertible securities that are issued in private placements).
In addition to investing in Convertible Securities, the Fund also may invest in the following securities and instruments. The Fund may invest up to 20% of its net assets in:
(1) exchange-traded notes (ETNs),
(2) equity securities, ADRs, GDRs, BDCs listed on domestic or foreign securities exchanges,
(3) futures contracts on equity indexes, exchange-listed and
(4) over-the-counter (OTC) index credit default swaps, and forward foreign currency exchange contracts.
Fund Top Constituents (11/05/15):
|Allergan Plc, Series A, 5.50%, Due 03/01/2018||3.69%|
|HOLOGIC INC Variable rate, due 12/15/2043||2.53%|
|PRICELINE GROUP INC/THE 0.35%, due 06/15/2020||2.52%|
|Wells Fargo & Company, Series L, 7.50%||2.49%|
|TESLA MOTORS INC 0.25%, due 03/01/2019||2.45%|
|RED HAT INC 0.25%, due 10/01/2019||2.30%|
|NVIDIA CORP 1%, due 12/01/2018||2.20%|
|SALESFORCE.COM INC 0.25%, due 04/01/2018||1.84%|
|ILLUMINA INC 0%, due 06/15/2019||1.83%|
|CITRIX SYSTEMS INC 0.50%, due 04/15/2019||1.80%|
FCVT Home Page
Category: Bonds> Global Bonds> Global Convertible Bonds
Convertible securities are an investment solution for investors seeking income and risk-managed capital appreciation potential. A convertible security is a debt instrument issued by corporations, yet has an embedded conversion option that generally enables the security to be exchanged or converted into a predetermined number of shares of common stock.
Convertible securities are considered hybrid securities because they combine the investment attributes of bonds and common stocks. They offer upside potential through participation in equity returns, while providing a degree of downside protection through their bond-like attributes.
Over the 6 most recent periods when the 10-year Treasury yield rose more than 100 basis points in a 12-month rolling period, convertible securities have:
– On average, outperformed equities and several fixed-income asset classes,
– Exhibited limited sensitivity to interest rates because of their embedded conversion option
Convertible securities had a positive return in all 6 of those periods.