Invesco to List Convertible Securities ETF

“Convertibles are hybrid securities that combine the par value and yield characteristics of a bond with the potential to participate in equity-like returns,” explained Ben Fulton, Invesco PowerShares managing director of global ETFs, in the announcement. The fund is expected to issue monthly distributions.  

The PowerShares Convertible Securities Portfolio will seek investment results that correspond (before fees and expenses) generally to the price and yield of the BofA Merrill Lynch All U.S. Convertibles Index (Underlying Index). The Fund will invest at least 80% of its total assets in the component securities that comprise the Underlying Index, which is designed to track the performance of U.S. dollar-denominated investment grade and non-investment grade convertible securities sold into the U.S. market and publicly traded in the United States. The Index constituents are market value-weighted based on the convertible securities prices and outstanding shares, and the Underlying Index is rebalanced daily.  

Convertible securities are typically issued as corporate bonds or preferred stock and may be converted into a specific number of shares of a company’s common stock within a specified time period. Convertibles offer investors several potential benefits, including the potential for enhanced risk-adjusted performance, current income and opportunity for capital appreciation, the announcement said.