Convertible Bonds
A convertible bond is debt that can be converted into the company's stock. Because of this feature, as stock prices rise, these bonds' prices also rise. If stock prices fall, these bonds still pay you interest so your downside is protected.
The convertible bonds are issued by various companies, therefore like any other bonds, an investor faces default risks. You can buy some funds that aggregate such convertible bonds, especially funds that invest in convertible bonds issued by quality companies.
An example is SPDR Barclays Convertible Securities (CWB).
In our next blog post, we will discuss one more option - Balanced Funds.