Guggenheim Rolls Out Junk Target-Date ETFs

January 25, 2011

Guggenheim expands lineup of target-maturity bond funds with first part of junk bond offering.

Guggenheim Funds, the Lisle, Ill.-based money management firm, is launching four target-maturity fixed-income ETFs today focused on the high-yield corporate bond markets, adding to its preexisting lineup of investment-grade corporate bond target-date bond ETFs.

The four ETFs are part of its plans to roll out nine such funds, and have maturity dates ranging from the end of 2012 and extending through to the end of 2016. Each of the funds will close upon maturity at the end of each respective year, with investors getting net asset value of all the bonds in the portfolio. That effectively offers investors something similar, though not identical, to holding an individual bond to maturity. The four ETFs have annual expense ratios of 0.42 percent.

That’s huge, because rising rates are dangerous for bond-fund investors. An actual bond can be held indefinitely and redeemed at its full par value at maturity, making price declines that accompany rising rates irrelevant unless you plan on selling before then. Traditional bond funds don’t have maturity dates, and investors who need every bit of their investments can lose a lot if they have to draw on principal in the middle of a rate-hike cycle.

The four new ETFs are:

  • The Guggenheim BulletShares 2012 High Yield Corporate Bond ETF (NYSEArca: BSJC)
  • The Guggenheim BulletShares 2013 High Yield Corporate Bond ETF (NYSEArca: BSJD)
  • The Guggenheim BulletShares 2014 High Yield Corporate Bond ETF (NYSEArca: BSJE)
  • The Guggenheim BulletShares 2015 High Yield Corporate Bond ETF (NYSEArca: BSJF)

 

The company originally filed to offer the funds in September under the Claymore name, just weeks before it changed the name of all of its ETFs to Guggenheim. The other five bond ETFs have maturity dates ranging from 2016 to 2020.

The ETFs use the BulletShares USD High Yield Corporate Bond Indices, which are developed by Accretive Asset Management LLC, Guggenheim said in a press release.

Existing Target-Maturity Products

The company’s seven existing target-maturity bond ETFs focused on investment-grade corporate debt are:

  • Guggenheim BulletShares 2011 Corporate Bond ETF (NYSEArca: BSCB)
  • 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).

 

They each have an annual expense ratio of 0.24 percent.

 

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