ETF investors can implement their own bond ladder strategy with defined-maturity bond funds. These types of ETFs typically buy bonds that mature in the year the fund will terminate, ensuring that investors can collect the bonds face value at maturity, along with a steady income payout along the way. Investors are meant to buy-and-hold these types of investments until they mature. In contrast, a regular bond ETF runs the risk of losing its original principal if interest rates go up, depending on the bond ETF’s effective duration. [Target Date ETFs for Retirement]
Guggenheim Investments and BlackRock’s iShares offering a range of laddered corporate debt.
Guggenheim’s suite of BulletShares bond ETFs include target maturity dates as far out as 2022 on corporate debt and 2020 on junk debt. The Guggenheim BulletShares 2022 Corporate Bond ETF (NYSEArca: BSCM) has a 3.31% 30-day SEC yield and the Guggenheim BulletShares 2020 High Yield Corporate Bond ETF (NYSEArca: BSJK) has a 4.66% 30-day SEC yield.
The iShares line includes muni and corporate bonds that mature up to the iShares 2019 AMT-Free Muni Term ETF (NYSEArca: MUAH), iSharesBond Mar 2023 Corporate Term ETF (NYSEArca: IBDD) and iSharesBond Mar 2023 Grade ex-Financials Term ETF (NYSEArca: IBCE). MUAH has a 1.04% 30-day SEC yield, IBDD has a 2.50% 30-day SEC yield and IBCE has a 3.21% 30-day SEC yield.
For more information on the bond market, visit our bond ETFs category.
Max Chen contributed to this article.