Defined maturity date bond funds

defined maturity date bond funds

If the ETFs bonds are mostly trading at a premium, then the amount of income the ETF distributes will likely be lower than the weighted average coupon.
These relatively new bond ETFs can provide investors with some of the diversification benefits of a typical bond mutual fund or ETF, but can also provide some expectation of a certain maturity date, much like holding individual bonds.
At the maturity date, the fund will make a cash payout to its investors.Fund shareholders may also receive taxable distributions attributable to a fund's sale of municipal bonds.Bond ETFs bscg bsch bsci bscj bsck bscl bscm bscn bsco.The municipal market can be affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities.I welcome your feedbackclicking on the thumbs up or thumbs down icons at the bottom of the page will allow you to contribute your thoughts. Put another way, as long as you buy and hold a defined maturity fund to maturity, you dont women search by phone need to worry about interest rate risk like you do with a normal bond fund.Defined maturity funds, which are also known as target maturity bond funds, have been around for a few years, but have yet to become very popular.IShares has a family of target maturity municipal bond ETFs for each year from 2014 to 2018.Mitigating this risk somewhat is the fact that ETFs hold bonds from many different issuers, which helps to lessen the impact if one issuer were to default.A second use is for a specific capital need, such as paying for a childs college.Since interest rates have been falling in the market for many years, bonds that were issued long ago tend to pay maturity dates ee bonds higher coupons than bonds issued today.Municipal funds normally seek to earn income and pay dividends that are expected to be exempt from federal income tax.If a bond will mature for 1,000 in 2016 (1,000 is its par value it might be trading for 1,050 today.Uses for target maturity bond ETFs.Nysearca: bsch guggenheim BulletShares 2018 Corporate Bond ETF (nysearca: bsci guggenheim BulletShares 2019 Corporate Bond ETF (.