On Wednesday, January 7, Global X expanded its collection of ETFs with a new suite of fund products.
Each of the six new funds in the suite invests in a selection of zero-coupon U.S. Treasury securities with predetermined maturity dates. Passively managed, these funds have expense ratios sitting at seven basis points each.
“For our first product launches of the new year, we’re glad to showcase our focus on expanding the breadth of our product offerings in areas such as fixed income,” noted Pedro Palandrani, head of product research & development at Global X. “The Zero Coupon Bond suite is designed to help investors manage future cash flow expectations and align their bond investments with specific maturity dates. By holding zero coupon securities to maturity, the funds minimize reinvestment risk since there are no coupon payments to reinvest at uncertain future rates.”
Advantages of Zero-Coupon Bonds
The new zero-coupon bond ETFs each invest in Treasury securities with a different maturity year. The ETFs are going to primarily allocate to U.S. Treasuries that reach maturity between January 1 and November 30 within their respective year. Each of the funds states its focused year within its title: the Global X Zero Coupon Bond 2030 ETF (ZCBA), Global X Zero Coupon Bond 2031 ETF (ZCBB), Global X Zero Coupon Bond 2032 ETF (ZCBC), Global X Zero Coupon Bond 2033 ETF (ZCBE), Global X Zero Coupon Bond 2034 ETF (ZCBF), and the Global X Zero Coupon Bond 2035 ETF (ZCBG).
These new funds can offer plenty of different portfolio applications for investors and advisors alike. Since these ETFs are transparent about their underlying investments, one can better plan ahead for their future cash flow projections. Furthermore, the predetermined maturity dates make it even easier to plan ahead for navigating the field of fixed income.
All of these advantages are coming with not only the flexibility of the ETF wrapper, but a lower cost as well. Seven basis points is relatively cheap, thus providing a lower cost of entry for activating the advantages of zero-coupon bonds.
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