Investing in Convertible Closed End Funds

Investing in convertible closed end funds can be done easily. You can buy these closed end funds from your brokerage.

Convertible Bond Funds

Investing in Convertible Closed End FundsInvesting in convertible securities can be very attractive for investors. Generally, these convertible bonds are interest-paying bonds that can be swapped for shares of the issuing company's stock at a predated price. The bond-like yield aspect of a convertible protects against stock declines, while the ability to convert into stock offers shelter against falling bond prices.

Using closed end funds, investors can maximize its return if there is an arbitrage between the fund’s NAV and fund’s price. The yield of these convertible closed end funds can be higher than convertible ETFs or convertible mutual funds.

Top Closed End Funds

These top performing closed end funds are selected based on its year-to-date performance in 2014. Most of these convertible bond mutual funds are also rated among the best in their category. I have also provided some details about its management, performance, expense ratio, initial investment requirement, risk, top holdings, etc.

Top performing convertible closed end funds in 2014 are:
  1. AGIC Convertible & Income II
  2. Calamos Convertible & High Income
  3. AGIC Convertible & Income
  4. Bancroft Fund
  5. Advent Claymore Convertible Securities & Income
  6. Ellsworth Fund
  7. Calamos Convertible Opportunities & Income
  8. Advent Claymore Convertible & Income
Updated on 5/18/2014

AGIC Convertible & Income II (NCZ)

AGIC Convertible & Income II (NCZ)This AGIC Convertible & Income fund invests mainly in convertible and non-convertible income producing non-investment grade securities. Douglas Forsyth is the fund manager. With total assets of $889 million, it has 0.00% expense ratio fee. This top performing convertible closed end fund has a high yield of 10.47%.

In 2014, this AGIC Convertible & Income fund has a year to date return of 13.35%. The average 3 year return is 12.38%. This fund has an average coupon of 7.86%. Top 3 sectors are high yield corporate debts, convertible preferred debt, and convertibles debt. Top 5 holdings are U.S dollars, Wells Fargo & Co New Pfd 8.00 06 Sep 2014, Cenveo 7% 7.00 15 May 2017, Wells Fargo & Co, San Francisco Ca Pfd, and Credit Suisse Ag Nassau Brh Pfd 05 Mar 2015.

Calamos Convertible & High Income Fund (CHY)

Ranked with 4 stars rating by Morningstar, Calamos Convertible & High Income Fund has total net assets of $1.4 billion. It has an expense ratio fee of 1.49%. This convertible bond fund has a high yield of 8.47%. The yield is distributed monthly. The fund manager is John P Calamos since 2008.

This best convertible bond closed end fund has a 5 year annualized return of 18.09%. In 2014, the YTD return is 12.89%. The current share price is $14.21. Top 5 sectors in its portfolio are consumer discretionary, information technology, energy, industrials, and health care.

Bancroft Fund (BCV)

Bancroft Fund is a pure convertible bond closed end fund. The fund’s sponsor is Davis-Dinsmore Management Co. This convertible bond fund has small total assets of $123 million. The fund’s objective is to provide income and capital appreciation through investment in convertible securities. The current yield is only 2.41%.

This fund’s price is trading 14.10% discount to its NAV. This top convertible bond fund has 112 holdings. The top 3 sectors are information technology, financials, and health care.

Top Convertible Closed End Funds Performance

NoFund NameTickerNAVYieldMarket CapYTD Return %
1AGIC Convertible & Income IINCZ$8.36 10.47%$716M13.35%
2Calamos Convertible & HighCHY$14.19 8.47%$1,025M12.89%
3AGIC Convertible & IncomeNCV$9.29 10.57%$895M10.57%
4Bancroft FundBCV$23.12 2.41%$106M7.42%
5Advent Claymore Cnvt Secs&IncAGC$8.18 7.62%$241M5.85%
6Ellsworth FundECF$10.09 2.82%$115M5.15%
7Calamos Convertible Opps & IncCHI$13.40 8.51%$911M4.54%
8Advent Claymore Conv & IncomeAVK$19.89 6.14%$433M1.61%


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