Source: Barclays and BlackRock Solutions
Index returns are for illustrative purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
The graph shows a range of corporate bond maturities and the level of yield available in the market. If Bob were to invest equal amounts into these 10 iBonds, he could expect to receive monthly cash flows as the iBonds at each rung of the ladder are scheduled to distribute any income on a monthly basis. (Unlike a single bond, distribution amounts from iBonds ETFs will vary.) And every year starting 2016, one of the iBonds would mature and Bob would receive a lump sum payment. He can then spend that payment, or reinvest it in the next rung in the ladder.
For investors like Bob who are looking to build bond ladders, term maturity ETFs provide a new tool for building a robust investment solution.
Matthew Tucker, CFA, is the iShares Head of Fixed Income Strategy and a regular contributor to The Blog. You can find more of his posts here.