Convertible Bond

Convertible bond mutual funds and ETFs invest the majority of their assets... Convertible bond mutual funds and ETFs invest the majority of their assets in convertible bonds. These are hybrid investments—part equity, part bond. They typically allow the holder to convert a specified amount of stock at a particular price. These are attractive because they allow for upside participation if a company’s stock rises, while also offering downside protection. If a company’s stock increases, a convertible bond usually increases in price. On the flip side, if a company’s shares decrease, the bonds won’t fall as much, unless there are concerns about their ability to repay investors’ principal. Convertible bond mutual funds and ETFs are fairly conservative investments. However, it’s important to note that they usually offer less interest income than traditional bonds, and in the case of a bankruptcy, these bondholders are not first in line to be repaid. Last Updated: 12/27/2024 View more View less

Convertible bond mutual funds and ETFs invest the majority of their assets in convertible bonds. These are hybrid investments—part equity, part bond. They typically allow the holder to convert a specified amount of... Convertible bond mutual funds and ETFs invest the majority of their assets in convertible bonds. These are hybrid investments—part equity, part bond. They typically allow the holder to convert a specified amount of stock at a particular price. These are attractive because they allow for upside participation if a company’s stock rises, while also offering downside protection. If a company’s stock increases, a convertible bond usually increases in price. On the flip side, if a company’s shares decrease, the bonds won’t fall as much, unless there are concerns about their ability to repay investors’ principal. Convertible bond mutual funds and ETFs are fairly conservative investments. However, it’s important to note that they usually offer less interest income than traditional bonds, and in the case of a bankruptcy, these bondholders are not first in line to be repaid. Last Updated: 12/27/2024 View more View less