Guggenheim has bridged the gap between single bonds and the convenience of a bond exchange traded fund, giving investors liquidity, diversification and consistency.
“We have had tremendous reception with our BulletShares suite. They represent the best of both worlds — the characteristics and maturity of a single bond, and the diversification benefits of a single bond fund,” said Anthony Davidow, managing director and portfolio strategist at Guggenheim Investments. “BulletShares are ideal solutions for advisers seeking to manage life events such as retirement, college or a new home.” [How Changes in Bond Rates Affect Fixed-Income ETFs]
With target-date maturity ETFs, the bonds all mature at the same time and when maturity is hit, the fund closes and returns all investment capital to shareholders just like an individual bond would. Timothy Strauts for Morningstar reports that target-date maturity bond investments are an evolution to fixed-income investing.
The goal of a target-date maturity fund is to give investors the diversification and liquidity benefits of several bonds, but still capture the same return of principle of a single bond. Initially, growth in this sector of the bond market is expected to be slow, but should catch on as investors realize the benefits. [What High-Yield Bond ETFs are Saying About Stocks]