Guggenheim expands suite of BulletShares defined-maturity bond ETFs

Sep 23rd, 2016 | By | Category: Fixed Income

ETF STRATEGY NEWS! ETF Strategy is delighted to announce the launch of ETF Strategy Hub (hub.etfstrategy.com), an on-demand repository of webcasts, videos, podcasts and white papers. Debuting with Special Series on Technology & Innovation in China and the Digital Economy.


US-based exchange-traded fund provider Guggenheim Investments has extended its suite of BulletShares ETFs with the launch of the BulletShares 2026 Corporate Bond ETF (NYSE: BSCQ) and BulletShares 2024 High Yield Corporate Bond ETF (NYSE: BSJO). The BulletShares range is designed to serve investors looking to build bond laddering strategies consisting of investment-grade and high-yield ETFs with varying terms to maturity.

Guggenheim expands suite of BulletShares target-date bond ETFs

Guggenheim’s BulletShares ETFs may serve as the basis for laddered portfolios, helping investors plan for future cash requirements.

Unlike the majority of fixed income ETFs, which trade in and out of bonds to maintain a target duration exposure, BulletShares ETFs hold underlying bonds until maturity, at which point the fund will liquidate.

With maturity dates spanning from 2016 to 2026, BulletShares track indices of approximately 30 to 320 corporate bonds with effective maturities in the same calendar year as each fund’s maturity.

By combining funds of varying maturities, investors can build a portfolio that meets their future cash requirements.

William Belden, Managing Director, Head of ETF Business Development at Guggenheim Investments, commented: “Our investment grade and high yield BulletShares offer investors a creative way to tap into the fixed income market by focusing on securities with a given maturity date. The defined-maturity feature continues to be an effective investment strategy for investors looking to save for life events like retirement and college amid a volatile economic environment.”

The variety offered by the BulletShares suite also serves investors based on their unique investment expectations. For example, investors may choose to diversify interest rate risk prior to a Federal Reserve interest rate announcement by holding a laddered portfolio with both significant short-term and long-term holdings. Investors seeking more tactical positioning may choose to hold only one or a narrow range of BulletShares ETFs to maximise their exposure to a given duration.

Belden added: “Bond laddering offers a number of potential benefits, but creating bond ladders with individual bonds can be time consuming and cost prohibitive. In contrast, Guggenheim BulletShares ETFs offer investors a cost-effective and convenient approach to portfolio laddering.”

As bonds in a laddered portfolio mature, the cash distribution is generally utilized to cover lifestyle needs or reinvested in new bonds at the longest maturity of the ladder at the then current interest rate. Prior to maturity, this approach offers potential advantages in both rising and falling interest rate environments.

“If interest rates increase, an investor can reinvest the proceeds, if any, from maturing bonds at higher interest rates,” Belden said. “If interest rates decrease, the investor potentially benefits from price appreciation as the portfolio’s higher-yielding bonds increase in value.”

Launched in 2010, the suite consists of 20 defined-maturity corporate bond and high yield corporate bond ETFs and has more than $7bn in assets under management.

The complete BulletShares lineup consists of:

Guggenheim BulletShares 2016 Corporate Bond ETF (BSCG)
Guggenheim BulletShares 2017 Corporate Bond ETF (BSCH)
Guggenheim BulletShares 2018 Corporate Bond ETF (BSCI)
Guggenheim BulletShares 2019 Corporate Bond ETF (BSCJ)
Guggenheim BulletShares 2020 Corporate Bond ETF (BSCK)
Guggenheim BulletShares 2021 Corporate Bond ETF (BSCL)
Guggenheim BulletShares 2022 Corporate Bond ETF (BSCM)
Guggenheim BulletShares 2023 Corporate Bond ETF (BSCN)
Guggenheim BulletShares 2024 Corporate Bond ETF (BSCO)
Guggenheim BulletShares 2025 Corporate Bond ETF (BSCP)
Guggenheim BulletShares 2026 Corporate Bond ETF (BSCQ)

Guggenheim BulletShares 2016 High Yield Corporate Bond ETF (BSJG)
Guggenheim BulletShares 2017 High Yield Corporate Bond ETF (BSJH)
Guggenheim BulletShares 2018 High Yield Corporate Bond ETF (BSJI)
Guggenheim BulletShares 2019 High Yield Corporate Bond ETF (BSJJ)
Guggenheim BulletShares 2020 High Yield Corporate Bond ETF (BSJK)
Guggenheim BulletShares 2021 High Yield Corporate Bond ETF (BSJL)
Guggenheim BulletShares 2022 High Yield Corporate Bond ETF (BSJM)
Guggenheim BulletShares 2023 High Yield Corporate Bond ETF (BSJN)
Guggenheim BulletShares 2024 High Yield Corporate Bond ETF (BSJO)

Defined-maturity bond funds are also provided by iShares through its iBonds range. These are offered in two categories: iBonds Muni Bond ETFs, targeting investment grade municipal bonds; and iBonds Corporate ETFs, targeting US investment grade corporate bonds.

Tags: , , , , , , , ,

Leave a Comment