Corporate bond ladders using defined target dates ETFs

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Corporate bond ladders using defined target dates ETFs

Postby mpt follower » Tue Jan 29, 2013 11:30 am

I am resubmitting my question hoping to get some input!
I just became aware of the existence of fixed income ETFs with defined target dates. Guggenheim Investments (see http://guggenheiminvestments.com/Products/etf/Profiles) offers investment grade corporate as well as high yield corporate ETFs with defined target dates. Their use could be an ideal way to create short term bond ladders with diversification, something unavailable up to know unless large amounts of moneys are invested. It seems to me that these ETFs could be attractive for retired people who need steady monthly income stream, and if kept to maturity and there is no bond default, the investor is assured to get the money back, like a regular bond.
Has anyone considered these investment tools?
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Re: Corporate bond ladders using defined target dates ETFs

Postby Call_Me_Op » Tue Jan 29, 2013 11:42 am

There is still bond default, but the effect is buried in the NAV.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
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Re: Corporate bond ladders using defined target dates ETFs

Postby KyleAAA » Tue Jan 29, 2013 11:45 am

I would certainly consider it, but the ER is currently in the 0.24% range. I think I'd still be more likely to build a CD ladder with rates what they currently are and with those expenses, though. That said, awesome product if the cost comes down significantly (say, below 0.10%?)
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Re: Corporate bond ladders using defined target dates ETFs

Postby mpt follower » Tue Jan 29, 2013 11:59 am

KyleAAA wrote:I would certainly consider it, but the ER is currently in the 0.24% range. I think I'd still be more likely to build a CD ladder with rates what they currently are and with those expenses, though. That said, awesome product if the cost comes down significantly (say, below 0.10%?)


I understand that iShares is doing just that. They will soon release a series of investment grade corporate bond ETFs with defined dates for an ER=0.1% I am also waiting for that.
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Re: Corporate bond ladders using defined target dates ETFs

Postby friar1610 » Thu Jan 31, 2013 1:09 pm

mpt follower wrote:
KyleAAA wrote:I would certainly consider it, but the ER is currently in the 0.24% range. I think I'd still be more likely to build a CD ladder with rates what they currently are and with those expenses, though. That said, awesome product if the cost comes down significantly (say, below 0.10%?)


I understand that iShares is doing just that. They will soon release a series of investment grade corporate bond ETFs with defined dates for an ER=0.1% I am also waiting for that.


I need to study this a bit more but in theory it really sounds like building a ladder with 5 or 6 maturity dates would give you the best of both worlds - MFs (for diversity of holdings) and individual bonds (for definite maturities.) In my own case, I've been trying to simplify my holdings in the event my wife has to run things on her own if I predecease her. I'm afraid an approach like this may complicate things a bit much for her.
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