Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

A Bond ETF With An Equity Feel: (CWB)

TedTed
edited March 2019 in Fund Discussions
FYI: Investors looking for bonds that often feel like stocks can consider convertible bonds, which are easily accessible via the SPDR Bloomberg Barclays Convertible Securities ETF CWB,

Convertible bonds are hybrid securities that give investors the option to convert those bonds into shares of common stock of the issuing company.

Historically, convertible bonds have been among the best areas of the bond market to be involved with when interest rates rise, but CWB betrayed that reputation last year. Amid fears about the state of high-yield corporate debt and the fourth-quarter equity market plunge, CWB showed its correlation to equity market gyrations.

After slumping in the last three months of 2018, CWB finished the year lower by 2 percent compared to 0.1-percent gain for the Bloomberg Barclays U.S. Aggregate Index.

The correlations between convertible debt and stocks can't be understated.
Regards,
Ted
https://www.marketwatch.com/story/a-bond-etf-with-an-equity-feel-2019-03-29-1246451/print

M* Snapshot CWB:
https://www.morningstar.com/etfs/ARCX/CWB/quote.html

Comments

  • edited March 2019
    I get my convertible security exposure through FISCX which is held in my hybrid income sleeve of my portfolio. Some other members on the board also own this fund. Through the years it has done me well as its 10Yr total return has averaged better than 13% per year.
  • I use ANNPX
  • edited January 2022
    Reviving this thread! Anybody have further thoughts on ANNPX? Virtus AllianzGI Convertible Inst

    Performance of ANNPX is outstanding. Some select stats below
    Age = 28 years, Mgr Tenure = 28 years
    Life APR = 11.6 which beats SP500 by 0.8
    Max DD = 42.6 vs. SP500 at 50.9
    Life Sortino = 1.07 vs. SP500 at 0.86
  • Excellent. How long have you two been with it?
  • I am not invested, popped up on my screen so I'm looking further into the fund.
  • my own digging just now made it look a little bit less appealing (perhaps) than your nice summary

    but v interesting, ty
  • edited January 2022
    @davidmoran
    What are the downsides that you see?

    ANNPX 15,20,25 year stats over PRWCX are very solid. I like to use PRWCX as a benchmark against any new fund I am evaluating given the long term solid track record of PRWCX. I'm surprised that a fund with performance stats comparable(and better in some areas) to PRWCX has not been discussed more on this forum.
  • Yeah.
    My investigation is on the capricious side thus far: its ytd vs VONE and VONV, FPURX and FMSDX, which is only a few weeks' sample, but also looking at its behavior since 2/21/20, the slightly deeper Feb-March dip than the latter two mfunds, then a spectacular runup, yet flat or slumping since, and then this latest slump.
    Trying to understand the lability, in other words.
  • edited January 2022
    Understood, tks for the feedback. We are measuring and weighting differently the stats of ANNPX and the alts you called out. Typically I give zero to low weight to periods below three years. I place a high weight on Sortino, rolling period averages and MaxDD.

    VONE has done well, below are some comparative stats between VONE and ANNPX, first number is ANNPX, second number is VONE

    3Y Stats
    APR: 27.5, 26.1
    MaxDD: 13.8, 20.3
    Sortino: 3.25, 2.36
    Rolling 1Y APR: 34.1, 24.8

    5Y Stats
    APR: 19.7, 18.3
    MaxDD: 13.8, 20.3
    Sortino: 2.56, 1.72
    Rolling 3Y APR: 21.1, 14.9
  • VONE is the Vanguard Russell 1000 ETF.
    ANNPX invests primarily in U.S. dollar-denominated convertibles.
    Since these two funds are vastly different, why compare them?
  • edited January 2022
    It is fair to compare convertibles (hybrids) with moderate-allocation funds. However, the convertibles market is much more speculative now than a few years ago. Many speculative companies (startups, early-stage, low-quality) issue convertibles to get lower interest rates. A beauty of convertibles is that if the stock does well and trades above the conversion price, the debt goes away and becomes equity - so the company doesn't have to pay back debt in a traditional sense. Keep this in mind to assess why convertibles have tanked lately along with the selloff in speculative stocks - convertibles were hot in 2021 but are cold now. Tesla/TSLA is a big issuer of convertibles.
    Chart https://stockcharts.com/h-perf/ui?s=ANNPX&compare=FCVSX,FMSDX,FPURX,PRWCX&id=p99932100988
  • edited January 2022
    I agree VONE is not in the same asset class as ANNPX. I compared them based on the list of funds in David's comment. My comment was intended to show that I was evaluating ANNPX different than David.

    Nobody know how convertibles will perform in the future of course but ANNPX outperforming SP500 over a 28 year period with a lower DD, higher Sortino and the same manager is quite extraordinary.

    Very few funds have outperformed SP500 at the 25+ year mark and none with the same lead manager.
  • edited January 2022
    Thanks for your response.
    Based on your stats, ANNPX performance has indeed been excellent for the 3 Yr. / 5 Yr. periods.
  • Its spectacular performance since the big sharp dip of almost 2y ago is what has done it chiefly. (Speaking of recency.)

    Flattish the last year.

    If you compare it w PRWCX since '93 and stop short of the post-dip big runup, it is not quite as impressive, although it does outperform JABAX and FPURX, two of my faves.
    So: very nice.

    I included VONE since I wanted to see what a good alt does against a broad garden-variety equity index. That's the whole point of alts for me.

    I look at the two most recent 'stress' moments, that Feb-March '20 dip and also ytd, just to check how its holdings did in these unusual, or perhaps not so unusual, recent times.

    What do you think has happened the last 3mos to underperform those four so significantly? Not that it matters.
  • edited January 2022
    I pointed out in the last post that convertibles are issued by speculative, low-rated companies and those haven't been doing well lately. I verified this further by checking correlations using PV: ANNPX has higher correlation with VTWO (small-cap R2000) than with VONE (LC R1000); the SAME for FCVSX. Checked R2000/IWM/VTWO lately?
  • that fido same as virtus

    ty
  • edited January 2022
    Using a few pre-defined periods as per MFO, here are some APR stats

    (1)CV19 Bear(Bear 6): 202001 - 202003
    FAYZX: -10.9
    FPURX: -11.3
    ANNPX: -11.5
    JABAX: - 11.6
    PRWCX: -12.0

    (2)GFC Bear(Bear 5): 200711 - 200902
    JABAX: - 16.6
    ANNPX: -26.0
    PRWCX: -28.9
    FPURX: -30.0

    (3)Dec '18 Selloff: 201812 - 201812
    FAYZX: -3.4
    ANNPX: -4.4
    PRWCX: -4.6
    JABAX: - 4.7

    (4)Rising Rates: 200406 - 200702
    PRWCX: 12.8
    ANNPX: 11.7
    FPURX: 10.4
    JABAX: 9.8

    (5)Full Cycle 5: 200711: 201912
    PRWCX: 9.1
    ANNPX: 8.3
    JABAX: 7.9
    FPURX: 6.9

    (6)Full Cycle 6: 202001: 202112
    ANNPX: 28.1
    VONE: 23.6
    FPURX: 19.7
    PRWCX: 18.3
    JABAX: 15.6
  • 5 is the coolest of these imo , makes the convertible thing look special in these guys’ hands
  • #5 covers quite a bit of the period that Giroux has been running PRWCX so while still lower than PRWCX still a strong performance.

    This fund is definitely on my buy list now, just need to figure out an appropriate entry point.
  • davidrmoran said,
    What do you think has happened the last 3mos to underperform those four so significantly? Not that it matters.
    I have zero interest in the fund, but I am interested in the answer to David's question (maybe I missed it?). In fact, over the past 1 year convertibles as a group look horrendous compared to the S&P 500, the bench mark I see it compared to. S&P 500= +19%, ANNPX= -9%. ANNPX is slightly worst than the convertibles category the past year.

    In any case, sure looks like one would need a whole lot of conviction and long term staying-power to own this fund. I know I do not.
  • edited January 2022
    I find yogibear explanation on recent performance of ANNPX co-related to small cap reasonable.

    A three month(or even 1 year) stretch of underperformance does not bother me within the context of solid longer term performance.

    Regards benchmarks, while ANNPX has performed well compared to SP500, I see a moderate allocation benchmark as more appropriate (PRWCX, VWELX, VBINX).

    Simplistically I see ANNPX performance close enough to PRWCX during periods 1-5 but significantly outperforming PRWCX by 10 points during period 6 which is impressive imo. As cherry on top, ANNPX even outperformed VONE during this period.
  • @staycalm :
    One question if I may ?
    #1 has 4 entries.
    #2-#5 have 3 entries
    #6 has added VONE

    Possible no info for missing data (fund) ?
  • edited January 2022
    @derf
    The different entries are due to the inception dates of the funds and the fact that I did not capture all perf data for all funds for all periods. If this forum allowed screenshots, would have been easy for me to upload all perf data for all periods for all funds. I'm too lazy to post this elsewhere and link it here.

    VONE is not a comparable to ANNPX but I included it in my post due to prior comments and when VONE performance was in between the true comparables
  • edited January 2022
    **EDIT**
    I edited my compare post and added JABAX to all periods. JABAX performance during GFC stands out.

    @yogi
    During Period 5, ANNPX co-relation with PRWCX is 0.91 and 0.89 with IWM.
  • Thank you for your reply @stayCalm
Sign In or Register to comment.