“BSJG has an average duration of 2.7 years, but only invests in bonds that mature in 2016. In contrast, SJNK has more than half of its assets with maturities in three to five years according to SSGA’s website. Investors that want to obtain precise exposure to manage risk will find particularly appealing the target maturity aspect of the Guggenheim series that has 14 products less than three years old and approximately $2.6 billion in assets. Relative to SJNK, BSJG has slightly more exposure to bonds rated BB, but it also has a negative credit risk consideration in our ranking methodology. This is offset by its tight $0.01 bid/ask spread,” said S&P Capital IQ.
Defined maturity 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. [Defined Maturity ETF Education]
Guggenheim BulletShares 2016 High Yield Corporate Bond ETF