Understanding
BulletShares
Bond
Laddering
Implementation
Strategy

Explore BulletShares® Portfolio Applications

BulletShares ETFs offer fixed income investors a simple, convenient and cost-effective1 alternative to purchasing individual bonds. Our suite of ETFs offers a range of specific maturities, enabling you to customize your corporate bond portfolio to target the appropriate level of risk for your portfolio objectives.

BulletShares ETFs are available for investment grade corporate, high yield and emerging market debt and can be used in a variety of portfolio strategies: 

Fill gaps in existing portfolios. By holding bonds that all mature in a specific year, these funds may be effective in filling gaps in existing portfolios. The ability to invest in a specific range of maturities may also help you enhance diversification2. For example, if your fixed income portfolio is overweight corporates you can choose to consider high yield or emerging market BulletShares ETFs.

Build a laddered portfolio. Laddering is a time-tested fixed income strategy that can be effective for investors. Simply put, a laddered portfolio consists of bonds with varying terms to maturity. As these bonds mature, the proceeds can be reinvested into new bonds at current coupon rates (thus extending the ladder), invested into other products or withdrawn. Laddering offers potential advantages in rising rate (proceeds can be reinvested into higher-coupon bonds) and falling-rate (potential appreciation from holding above-market coupons) environments.

Obtain targeted yield-curve exposure. The defined maturities of the different BulletShares ETFs make it simple and relatively inexpensive1 to fill portfolio gaps, but these are also useful for yield-curve strategies. If an investor wishes to target a point on the yield curve which is seen (for example) as undervalued, one of our funds may be an effective solution. If the desired term is three years, selecting a BulletShares ETF (corporate, high yield or emerging market) maturing three years out can help quickly and efficiently execute the strategy.

Implement a barbell strategy. This strategy is similar to the targeted yield-curve description above, but instead of investing in one maturity period, a barbell uses two. Generally deployed when steadily rising rates are expected, a barbell is created by simultaneously investing in both short and longer-maturity bonds. The short maturity issues can be reinvested at higher rates at maturity, while the longer maturity bonds lock in current coupons. BulletShares ETFs allow investors to quickly and easily implement a barbell strategy.

Plan for a future expense. While some expenses are unexpected, the timing of many can be predicted with a good amount of accuracy. BulletShares ETFs can be used to help accrue for future expenditures or investments like a down payment for a house, saving for college or growing your retirement assets. With the precise maturity periods of BulletShares ETFs, you can match the due date of your expected liability with the maturity of your account assets.     

1 Since ordinary brokerage commissions apply for each buy and sell transaction, frequent trading activity may increase the cost of ETFs.

2 Diversification neither assures a profit nor eliminates the risk of experiencing investment losses.

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