A product line that has garnered some momentum in terms of raising asset levels and awareness is the Guggenheim BulletShares lineup of ETFs.
These products were designed to provide index exposure to the Corporate Bond and High Yield Corporate Bond spaces with a defined maturity or “term.”
In other words, the underlying bond portfolios are held until the bonds mature, and these are structured in such a way in that all the bonds owned in a specific portfolio all mature during the same year.
The index provider, Accretive Asset Management aims at owning bonds that all have the same effective maturities, on a year by year basis, for each corresponding Corporate Bond and HY Corporate Bond ETF. [More Target-Date Bond ETFs Provide Rising Rate Hedge]
BSCD (Guggenheim BulletShares 2013 Corporate Bond, Expense Ratio 0.24%) for instance will “mature” this year, and the ETF will cease trading at some point this year as such.
BSCC and BSJC, which were formerly the Guggenheim 2012 Corporate Bond ETF and Guggenheim High Yield Corporate Bond ETF respectively, no longer trade as ETFs on the market since the underlying bonds have long since matured.
Currently, Guggenheim lists a product that represents the Corporate Bond space on a defined maturity level, year by year, all the way out to 2022, and out to 2018 on the HY Corporate Bond level.
BSJF (Guggenheim BulletShares 2015 High Yield Corporate Bond, Expense Ratio 0.42%) has been the most popular product in the lineup to date, reeling in $434 million since inception in 2011, followed by BSJE (Guggenheim BulletShares 2014 High Yield Corporate Bond, Expense Ratio 0.42%) which has attracted $324 million in assets under management.
Is this specialized area of fixed income exposure for ETF investors the future? iShares seems to think so, as the mammoth ETF provider recently launched IBDA (iSharesBond 2016 Corporate Term, Expense Ratio 0.10%), IBDB (iSharesBond 2018 Corporate Term, Expense Ratio 0.10%), IBDC (iSharesBond 2020 Corporate Term, Expense Ratio 0.10%), and IBDD (iSharesBond 2023 Corporate Term, Expense Ratio 0.10%).
Investment managers whom are conscious of duration risk in portfolios will likely readily embrace products structured like these once they learn about them and isolate where they can fit them in their overall investment models.
IBCC (iSharesBond 2018 Corporate ex-Financials Term, Expense Ratio 0.10%) has been trading since April of this year, and is structured in the same fashion as the aforementioned funds, and thus far the fund has picked up $126 million in assets under management in a short period of time. Also in existence in this new lineup from iShares are IBCB (iSharesBond 2016 Corporate ex-Financials Term, Expense Ratio 0.10%), IBCD (iSharesBond 2020 Corporate ex-Financials Term, Expense Ratio 0.10%), and IBCE (iSharesBond 2023 Corporate ex-Financials Term, Expense Ratio 0.10%).
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.
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