Claymore Readies Targeted Corporate Bond ETFs

by on May 25, 2010 | ETFs Mentioned:

Claymore, the Lisle, Illinois-based ETF issuer known for its line of international and sector-specific equity funds, recently filed details on a unique series of corporate bond ETFs. The recent filings included additional details on products first mentioned in November, including:

  • BulletShares 2011 Corporate Bond ETF (BSCB)
  • BulletShares 2012 Corporate Bond ETF (BSCC)
  • BulletShares 2013 Corporate Bond ETF (BSCD)
  • BulletShares 2014 Corporate Bond ETF (BSCE)
  • BulletShares 2015 Corporate Bond ETF (BSCF)
  • BulletShares 2016 Corporate Bond ETF (BSCG)
  • BulletShares 2017 Corporate Bond ETF (BSCH)

Previous filings had included additional securities through 2020, but those weren’t mentioned in the latest round.

Each of the proposed ETFs would be linked to an index comprised of investment grade corporate bonds with effective maturities in the year within the ETF name. Unlike most ETFs that operate with an indefinite time horizon, the proposed BulletShares ETFs would terminate on or about December 31 of the relevant year. At that point, the funds would make a cash distribution to shareholders. The names of these ETFs are a reference to a “bullet” investment strategy, which involves acquiring different securities maturing around the same target date.

The BulletShares products would represent a new level of granularity in the fixed income ETF universe. Existing corporate bond ETFs offer exposure across the maturity spectrum. The iBoxx $ Investment Grade Corporate Bond Fund (LQD), for example, has about 25% of its holdings in bonds maturing in three to five years and another quarter in securities with maturity dates between 25 and 30 years (see a breakdown of LQD holdings).

Earlier this year iShares introduced a suite of “target end date” muni bond ETFs that function in a similar fashion, allowing investors to fill holes in existing “ladders” and build new ladders within their portfolios.

Each of the new Claymore ETFs would charge an expense ratio of 0.24%, roughly in line with the average for the Corporate Bonds ETFdb Category. For news on all new ETF product launches, sign up for our free ETF newsletter.

Disclosure: No positions at time of writing.