The ETF Underdogs, Part 5: Bond Edition

Weitz Core Plus Bond ETF

WCPB

WCPB fits into a broader pattern we have seen across fixed income: strategies that began as traditional bond mutual funds are increasingly migrating to the ETF format, and “core plus” mandates tend to translate especially well.

A core plus strategy starts with a conventional investment-grade bond allocation — typically U.S. Treasuries, agency mortgage-backed securities, and investment-grade corporates — and then adds a “plus” sleeve that may include high yield, securitized credit, emerging markets, or other spread products.

The goal is to maintain the stability of a core bond portfolio while selectively adding sources of non-correlated yield or total return.

WCPB follows this template with a concentrated, bottom-up multisector portfolio. The managers actively assess credit quality and manage duration relative to the opportunity set in the bond market, rather than targeting an index-driven interest-rate posture That discipline matters because, as 2022 proved, rigid duration positioning can lead to meaningful underperformance when long-term yields rise quickly. The ETF uses the Bloomberg U.S. Aggregate Bond Index as its benchmark and charges a 0.45% net expense ratio against a 4.28% subsidized 30-day SEC yield.

At this early stage following its August launch, the portfolio reflects a cautious and opportunity-driven allocation, with meaningful exposure to mortgage-backed securities and a sizable Treasury allocation. The managers have also selectively allocated to higher-yielding sectors, including high yield corporates and securitized credit such as commercial real estate collateralized loan obligations (CRE-CLOs), where relative value has been compelling.

As a result, its out-of-benchmark exposure comes primarily from lower-rated credit that distinguishes it from the Bloomberg Agg: 6% in BB-rated bonds and 8.1% in B-rated bonds. These segments represent the core of WCPB’s “plus” risk budget.

The duration profile shows a portfolio positioned toward the intermediate range, with 38.6% of assets in the three-to-five-year bucket and 28.3% in maturities beyond ten years. Combined with 12.9% in the zero-to-one-year segment and 13.4% in five-to-seven years, the distribution reflects  a structure that may respond favorably to shifts in interest-rate conditions.

Overall, WCPB represents a traditional core plus design delivered through the ETF wrapper, with a clear emphasis on securitized credit and selective high-yield exposure to enhance returns, while maintaining an anchor in high-quality bonds.

Advent Convertible Bond ETF

ACVT

Fixed income ETF lineups have expanded dramatically, with products now covering senior loans, CLOs dipping into the B–BBB range, private credit sleeves as large as 15%, and even specialized municipal revenue strategies.

Yet convertible bonds remain an underused segment despite offering a compelling hybrid structure. ACVT is one of the few recent entrants dedicated to this niche.

A convertible bond combines a traditional corporate bond with an embedded option to convert into equity. That optionality provides upside if the issuer’s stock appreciates, while the bond component delivers income and helps cushion downside. Issuers tend to be growth-oriented companies seeking lower borrowing costs or greater flexibility than issuing straight equity.

ACVT is actively managed using a bottom-up process centered on positive asymmetry. In the convertible space, that means targeting situations where the bond value offers meaningful downside support, while the conversion feature still gives room for equity-linked appreciation.

The fund often focuses on sectors where pricing dislocations or sentiment-driven overshooting may create misalignment between a company’s bond value and its equity potential.

This allows the ETF to appeal to two investor types: bond-focused allocators who want a measured way to introduce upside potential without embracing full equity volatility, and equity investors who normally avoid bonds but want income with lower drawdown risk than owning common shares outright.

Current portfolio characteristics illustrate this positioning. The fund’s duration of 2.7 years keeps interest-rate sensitivity low, ensuring the primary focus of the ETF remains on credit dynamics and the value of the embedded option, and not yield curve positioning.

Meanwhile, a delta of 22.67% indicates that the portfolio participates in just over one-fifth of the underlying equity’s price movements. This aligns with a more conservative convertible profile, offering smoother participation in market recoveries while limiting downside exposure.

Other metrics reinforce the strategy’s emphasis on balanced optionality. The median conversion premium of 64.23% is typical for convertibles that prioritize protection first, signalling that many holdings are still trading well above their conversion price and behave more like bonds than equities.

At the same time, a 12.77% premium to bond value reflects the additional amount investors pay for the embedded equity upside. This is a reasonable level for a diversified convertible portfolio where optionality is meaningful but not speculative.

The sector mix is led by technology at 36%, followed by financials, healthcare, and consumer discretionary. Tech-heavy exposure is common because many technology firms use convertibles to manage dilution and preserve cash for research, development, and expansion.

ACVT currently distributes a 2.77% 30-day SEC yield with monthly payments and charges a 0.65% net expense ratio, offering one of the few actively managed convertible strategies available in ETF form.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.