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Guggenheim Investments, a US-based provider of exchange-traded funds (ETFs), has expanded its suite of defined-maturity corporate bond ETFs with the launch of two new BulletShares funds on the NYSE Arca: the Guggenheim BulletShares 2021 Corporate Bond ETF (BSCL) and the Guggenheim BulletShares 2022 Corporate Bond ETF (BSCM).
The new funds, which are linked to indices developed by Accretive Asset Management, provide access to a diversified portfolio of corporate bonds with effective maturities in 2021 and 2022 respectively – the years in which the funds themselves mature.
Guggenheim’s BulletShares were the first defined-maturity corporate bond ETFs on the market, but have since been followed by similar products from iShares in the US, and RBC and BMO in Canada. As yet, there are no such ETFs available in Europe.
The BulletShares line-up currently consists of 16 funds offering exposure to either investment grade or high-yield corporate bonds with maturity dates ranging from 2013 to 2022. The portfolios typically include around 70 to 190 bonds.
Underlying bonds are sourced from multiple issuers, which may reduce issuer concentration risk and potentially lower portfolio volatility. This approach provides investors with diversified and liquid bond exposure compared to investing in individual bonds, while also offering the potential for monthly distributions and a final distribution at maturity.
The funds, which have a multitude of possible portfolio applications from bond laddering to asset/liability matching to adjusting portfolio duration, have steadily gained in popularity with investors. In 2012, total assets in the suite increased 133%, and year-to-date (as of June 30, 2013) assets are up $967 million.
William Belden, Managing Director for Product Development at Guggenheim Investments, said: “Defined-maturity continues to be a proven investment strategy for investors looking to save for events like retirement amid a volatile economic environment. We pioneered this segment of the market with the first BulletShares in 2011, and are excited to grow our existing line-up with two new corporate bond ETFs”
The new funds each come with an expense ratio of 0.24%.