“If interest rates increase, an investor can reinvest the proceeds, if any, from maturing bonds at higher interest rates,” Belden added. “If interest rates decrease, the investor potentially benefits from price appreciation as the portfolio’s higher-yielding bonds increase in value.”
As the two new ETFs’ names suggest, BSCP holds onto investment-grade corporate debt securities that mature by December 2025 while BSJN tracks speculative-grade corporate debt securities that mature by December 2023.
BSCP’s credit quality includes AAA 3.2%, AA 11%, A 34% and BBB 52.0%. Sector weights include banking 24.6%, consumer non-cyclical 19.6%, energy 14.3%, tech 11.5%, telecom 9.3%, REITs 4.2%, capital goods 3.8%, consumer cyclical 3.3%, basic industry 2.3% and insurance 2.1%.
BSJN’s credit quality breakdown includes BB 55.6%, B 38.4% and CCC 5.8%. Sector exposure includes telecom 21.2%, consumer non-cyclical 16.9%, energy 15.6%, consumer cyclical 14.5%, tech 10.6%, capital goods 7.8%, basic industry 4.0%, electric 3.4%, banking 1.4% and transportation 1.3%.
BSJN has a 0.42% expense ratio and BSCP has a 0.24% expense ratio.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.