Welcome to the second edition of HILAS! We look forward to bringing you some new insights on convertible-based income investing every month.
In this edition we discuss the recent increase in issuance of mandatory convertibles, why they are coming to market now, and how you should approach them. These securities often behave quite differently from what appearances may suggest, and many advisors have bought them for clients without understanding this. We explain all this inside.
We also provide a look inside the top holdings of the CWB exchange-traded fund. As you’ll see, this fund is not built the way you might expect a convertible-based fund to be constructed. That’s great in a stock market that keeps going higher, but that’s not the kind of market people buy convertibles for. If you’re looking for a defensive approach to stocks, CWB has some severe drawbacks, as you will see.
Finally, Jeff Alton provides a short but highly educational introduction to “Yieldcos,” a small but growing sector of the income-securities market.
We hope you enjoy this issue and look forward to becoming one of your main resources for convertible and income investing.
Bill Feingold George Chuang
Hillside Advisors LLC