In comparison, other bond ETFs that hold a basket of varying bond maturities will be subject to receive payments equal to the current market price of the shares, which is affected by interest rate risk. Consequently, broad basket bond ETFs can see prices decline if interest rates rise.
Currently, ETF investors can look through Guggenheim Investment’s line of BulletShares ETFs and iShares target year municipal and corporate bond ETF offerings.
Guggenheim offers a range of target-date investment-grade corporate bonds for yeac year from 2013 to 2020 and high-yield bonds for each year from 2013 to 2018.
iShares has a suite of target maturity municipal bond ETFs for each year from 2013 to 2018, and the firm recently launched corporate bonds target maturity bond ETFs that exclude the financial sector for the years 2016, 2018, 2020 and 2023.
For more information on bonds, visit our bond ETFs category.
Max Chen contributed to this article.