Hi all. Does anyone have any experience and/or opinions about iShares target-date municipal bond ETFs? Information available online suggests that the point of these instruments is that they "behave" like individual municipal bonds in that they have a specific maturity date when the ETF will liquidate, but also provide diversification in that each ETF holds a basket of bonds. These features allow the bonds to be laddered much like one would ladder individual bonds.
From Seeking Alpha website: Most muni bond ETFs are designed to operate indefinitely, using any proceeds from maturities to purchase longer-dated funds. But iShares offers a lineup of muni bond ETFs that deliver a cash flow experience similar to individual bonds. These funds concentrate on muni bonds maturing in a certain year, meaning that the interest rate risk component gradually declines as the maturity date approaches. And as the target date approaches and the underlying bonds mature, these ETFs will gradually convert to cash that will ultimately be distributed to shareholders.
The er is a little high at .30%. But the target-date aspect seems to limit the downsides of typical bond funds.
Is this really the best of both worlds? I am here guided by two maxims:
1) if it seems too good to be true, it probably is, and
2) investment products are created and marketed to make money FROM you, not FOR you.
Thoughts would be welcome and appreciated. Best wishes for a happy and healthy 2013 (and for a safe landing