Whether you think it's a bear market rally or something more long term, investors in convertible bond funds are taking advantage.

Heading into Thursday, the average convertible mutual fund was up 7.69% so far in 2009, according to Morningstar data. In the past month, such funds have soared more than 9%.

With that as a backdrop, State Street Global Advisors launched today the SPDR Barclays Capital Convertible Bond ETF (NYSE Arca: CWB). According to SSgA, it's the first ETF to focus solely on convertible bonds available to U.S. investors.

As explained in a statement accompanying the launch, convertible bonds can be exchanged—at the option of the holder—for a specific number of shares of the issuer's preferred or common stock. For investors, that means convertibles provide the safety of a bond with the upside potential of equities; the trade-off is that they typically pay lower yields than standard corporate bonds.

CWB, for instance, debuted with an average coupon of 2.47%; that compares to a 5.11% coupon on the Lehman Aggregate and coupons of 6-8% on straight corporate debt. It has an average credit quality of Baa1.

"Offering a unique risk-return profile that combines the yield of corporate bonds with the capital appreciation potential of stocks, convertible bond exposure is experiencing increased demand as investors look to improve the diversification of their portfolios," said James Ross, SSgA's senior managing director, in the statement.

CWB comes with an expense ratio of 0.40%.

At the end of last year, some 156 issues were included in the new ETF's underlying index. The fund holds only 36 names, however.

Because of the link to equities, sector and specific company exposure matters more in convertible bonds than in other fixed-income markets. Sector allocations weren't immediately available, but the fund's top 10 holdings and weights were in: