Guggenheim expands its lineup of target-date-maturity, investment-grade corporate bond ETFs
Guggenheim, the Lisle, Ill.-based money management firm that acquired Claymore and Rydex, launched three additional target-date-maturity investment-grade corporate bond funds, adding to a pre-existing family of six of the so-called BulletShares bond funds that have maturities ranging from the end of this year to the end of 2017.
The three new funds will mature in 2018, 2019 and 2020, respectively, meaning each will close at the end of each of those years. At maturity, investors get net asset value of all of the bonds in the portfolio, effectively offering investors something similar, though not identical, to holding an individual bond to maturity.
It’s an innovation that affords strategies like laddering bond holdings, all in the context of holding a diversified portfolio of corporate debt. The BulletShares products, by allowing investors to hold the ETF to maturity, can also prevent having to take out principal at a time when prices of conventional bond funds are sharply lower.
The three funds, which each have an annual expense ratio of 0.24 percent, are as follows:
- Guggenheim BulletShares 2018 Corporate Bond ETF (NYSEArca: BSCI)
- Guggenheim BulletShares 2019 Corporate Bond ETF (NYSEArca: BSCJ)
- Guggenheim BulletShares 2020 Corporate Bond ETF (NYSEArca: BSCK)
All three of the funds utilize a passive or indexing approach to track investment-grade corporate bonds. And under normal conditions, the funds invest at least 80 percent of their total assets in component securities of their respective indexes.
The principle risk to investing in these funds is that issuers or guarantors of debt instruments or the counterparty to a repurchase agreement or loan of portfolio securities may be unable or unwilling to make timely interest and/or principal payments or otherwise honor their obligations. Another potential risk is that during periods of falling interest rates, an issuer of a callable bond may exercise its right to pay principal on an obligation earlier than expected. This may result in the ETF reinvesting proceeds at lower interest rates, resulting in a decline in the Fund’s income.
The six pre-existing Guggenheim BulletShares funds focused on investment-grade corporate include:
- Guggenheim BulletShares 2012 Corporate Bond ETF (NYSEArca: BSCC)
- Guggenheim BulletShares 2013 Corporate Bond ETF (NYSEArca: BSCD)
- Guggenheim BulletShares 2014 Corporate Bond ETF (NYSEArca: BSCE)
- Guggenheim BulletShares 2015 Corporate Bond ETF (NYSEArca: BSCF)
- Guggenheim BulletShares 2016 Corporate Bond ETF (NYSEArca: BSCG)
- Guggenheim BulletShares 2017 Corporate Bond ETF (NYSEArca: BSCH)
Guggenheim also market a related family of BulletShares focused on high-yield corporate debt. It is currently marketing four junk bond-focused BulletShares ETFs, whose maturities range from the end of 2012 to the end of 2015.