BulletShares Lineup Expands Beyond 2020: Guggenheim Launches BSCL, BSCM

by on July 17, 2013 | ETFs Mentioned:

With all eyes on the stock market as major indexes flirt with all-time highs, Guggenheim is circumventing  the euphoria surrounding equities by expanding its lineup of corporate bond ETFs. The Chicagoland-based ETF issuer is adding two new fixed income funds aimed at investors in search of more targeted maturities when it comes to corporate bonds exposure [see also 101 High Yielding ETFs For Every Dividend Investor]. 

This bond ETF launch comes at an opportune time for bargain shoppers seeing as how fixed income securities across the board have endured a rough stretch of profit taking as a result of all the Fed-stimulus fears, which have already faded away for the most part.

Bond Bulls Eyeing New BulletShares ETFs

The new funds which hit the street today are the:

  • BulletShares 2021 Corporate Bond ETF  (BSCL)
  • BulletShares 2022 Corporate Bond ETF (BSCM)

Unlike most fixed income ETFs on the market today, the BulletShares product suite invests in debt securities scheduled to mature in a specific, single calendar year. As that year arrives and the debt begins to mature, proceeds are not reinvested but rather distributed to investors. For this reason, BulletShares ETFs have gained tremendous popularity since launching in 2010 as they more closely replicate the experience of investing in individual bonds while still providing immediate diversification across a basket of securities [see Better-Than-AGG Total Bond Market ETFdb Portfolio].

Similar to all of the existing corporate bond BulletShares ETFs, BSCL and BSCM will each charge 0.24% in expense fees.

Currently, the two most popular corporate bonds BulletShares ETFs by AUM targeting corporate bonds are the:

The “junk bond” flavor of BulletShares has been even more successful, as these two High-Yield Bond ETFs dominate their investment grade-counterparts when it comes to total assets under management:

  • 2015 High Yield Corporate Bond Fund (BSJF, A-)
  • 2014 High Yield Corporate Bond Fund (BSJE, B+)

Meet The Corporate Bond Fund Competition

The new BulletShares funds will join a fairly crowded space, comprised of over three dozen offerings with an average expense ratio of 0.22%. Although BulletShares separate themselves from the pack quite nicely by offering exposure that more closely resembles the purchase of an actual bond, BSCL and BSCM will still face stiff competition from more established funds; the Corporate Bonds ETFdb Category is dominated by:

  • iShares Investment Grade Corproate Bond Fund (LQD, Awith $19 billions in AUM
  • iShares Barclays 1-3 Year Credit Bond Fund (CSJ, A-with nearly $11 billion in AUM
  • Vanguard Short-Term Corporate Bond ETF (VCSH, A+with over $6 billion in AUM

The new BulletShares products will likely taken on appeal among investors with more specific risk tolerance and current-income goals in mind given their unique, single-year maturity structure.

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Disclosure: No positions at time of writing.