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CBOE asks Sandra Testani, Vice President, ETF Product and Strategy, three questions about the recently listed Quality Convertible Securities ETF that offers a diversified portfolio of high-quality convertibles, combining the growth potential of stocks and the downside risk characteristics of bonds.
Seeks total return.
The fund is classified as non-diversified. Because it is non-diversified, it may hold large positions in a small number of securities. To the extent it maintains such positions; a price change in any one of those securities may have a greater impact on the fund’s share price than if it were diversified.
Generally, as interest rates rise, the value of the securities held in the fund will decline. The opposite is true when interest rates decline.
This fund is an actively managed ETF that does not seek to replicate the performance of a specified index. To determine whether to buy or sell a security, the portfolio managers consider, among other things, various fund requirements and standards, along with economic conditions, alternative investments, interest rates and various credit metrics. If the portfolio manager considerations are inaccurate or misapplied, the fund's performance may suffer.
Convertible securities are typically bond or debt securities and preferred stock that may be converted into a prescribed amount of common stock or other equity security of the issuing company at a particular time and price. The value of convertible securities may rise and fall with the market value of the associated common stock or, like a debt security, vary with changes in interest rates and the credit quality of the company issuing the bond or security. A convertible security tends to perform more like a stock when the associated common stock price is high relative to the conversion price and more like a debt security when the associated common stock price is low relative to the conversion price.
Seeks to capitalize on the deficiencies inherent in the construction of passive indices to deliver potential outperformance with better downside protection.
An actively managed convertible bond portfolio that focuses on quality, industry diversification and balancing beta exposure to optimize risk/return potential.
Portfolio managers identify high-quality, growth-oriented names through both fundamental and quantitative analysis.
Portfolio construction seeks optimal risk balance among securities offering attractive structural features and relative valuation.
Bid Ask Midpoint:
The midpoint between the highest bid and the lowest offer on the primary listing exchange, as of the time that the Fund's NAV is calculated, generally around 4 p.m. (Eastern time).
The price of the last reported trade on the fund's primary exchange.
Average annual returns illustrate the annual compounded returns that would have produced the cumulative total return if the fund's performance had remained constant throughout the period indicated. Returns for periods less than one year are not annualized.
ETF Market Performance (Inception to Date):
The fund's per share Net Asset Value (NAV) is the value of one share of the fund. Market Price is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund's NAV is calculated. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. Since shares of the fund did not trade in the secondary market until after the fund's inception, for the period from inception to the first day of secondary market trading in shares of the fund, the NAV of the fund is used as a proxy for the Market Price to calculate market returns. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
30-Day SEC Unsubsidized Yield: Represents net investment income earned by a fund over a 30-day period, expressed as an annual percentage rate based on the fund's share price at the end of the 30-day period. Unsubsidized yield does not adjust for any fee waivers and/or expense reimbursements in effect.
12 Month Distribution Rate: The sum of a fund's total trailing 12-month interest and dividend payments divided by the most recent day's ending share price (NAV).
Yield to Maturity: The internal rate of return of the security based on the given market price—it is the single discount rate that equates a security price (inclusive of accrued interest) with its projected cashflows.
Yield to Worst: Lowest yield possible for a security given the current price, taking into account both call dates and maturity.
Vice President and Co-Portfolio Manager
Index performance does not represent the fund's performance. It is not possible to invest directly in an index.
Exchange Traded Funds (ETFs) are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns.
The fund is classified as non-diversified. Because it is non-diversified, it may hold large positions in a small number of securities. To the extent it maintains such positions; a price change in any one of those securities may have a greater impact on the fund's share price than if it were diversified.
The gross expense ratio is the fund's total annual operating costs, expressed as a percentage of the fund's average net assets for a given time period. It is gross of any fee waivers or expense reimbursement. The net expense ratio is the expense ratio after the application of any waivers or reimbursement. This is the actual ratio that investors paid during the fund's most recent fiscal year. Please see the prospectus for more information.
For detailed descriptions of indices or investing terms referenced above, refer to our glossary.
Source: Bloomberg Index Services Ltd
Exchange Traded Funds (ETFs): Foreside Fund Services, LLC - Distributor, not affiliated with American Century Investments Services, Inc.