XTF Capital Corp has launched Canada’s first Convertible Bond ETF – Canadian Convertible Liquid Universe ETF, the fifth exchange-traded fund launched by the company this month. The Convertible Bond XTF began trading on the Toronto Stock Exchange on Tuesday, 7 June, 2011 under the symbol CXF (for its Common Units) and CXF.A (for its Advisor Units).
“The Convertible Bond XTF is unique to Canada,” say Barry Gordon, President and CEO of XTF Capital Corp and First Asset. “Our deep experience with convertible bonds puts XTF Capital Corp. in a position to properly assess the eligible universe and make the subtle decisions for inclusion or exclusion from the portfolio.”
Gordon also notes that convertible bonds are not uniform in structure and have many different call and conversion features. He adds that the Convertible Bond XTF follows a rules-based methodology of portfolio construction, but the Manager must have an override to include or exclude particular bonds in order to capture special situations.
The investment objectives of the Convertible Bond XTF, as further described in the prospectus, are to provide holders with (i) quarterly cash distributions, and (ii) the opportunity for capital appreciation by investing on a capitalisation weighted basis in a portfolio (the “Convertible Bond Portfolio”) of Convertible Bonds of Canadian issuers. Inclusion of a Convertible Bond in the Convertible Bond Portfolio is based upon the following criteria: (i) minimum market capitalisation outstanding of $50 million; (ii) minimum trailing 30 day average daily volume traded of $150 thousand; (iii) publicly traded on a stock exchange in Canada; (iv) not currently in default of payment of either interest or principal; and (v) at least 31 days to maturity (either term or next call).