RBC Global Asset Management has extended its suite of target maturity corporate bond ETFs with two new products reaching maturity in 2024 and 2025.

Mark Neill, Head of RBC ETFs.

Listed on the Toronto Stock Exchange, they are the RBC Target 2024 Corporate Bond Index ETF (RQL CN) and the RBC Target 2025 Corporate Bond Index ETF (RQN CN).

Unlike conventional fixed income ETFs, which trade in and out of bonds to maintain a broadly static duration exposure, target-maturity ETFs acquire a portfolio of bonds with maturity dates in line with the target year and hold them until maturity, at which point the ETF liquidates.

By combining funds of varying target maturity dates, investors can tailor portfolios to meet specific future cash requirements. And by using target maturity bond ETFs, as opposed to individual securities, investors can benefit from diversification, thereby mitigating idiosyncratic risks such as credit rating downgrades or default.

Each product RBC’s range tracks an index from FTSE Russell that targets a portfolio of Canadian dollar-denominated investment grade corporate bonds structured to mature in the same calendar year as the ETF. The indices are part of the index provider’s FTSE Maturity Corporate Bond Index family.

“The suite of RBC Target Maturity Corporate Bond ETFs offers investors and advisors the flexibility to tailor their bond laddering strategies to the maturity date of their choice,” said Mark Neill, Head of RBC ETFs. “These ETFs are intended to be a replacement for holding individual corporate bonds and aim to reduce risk through issuer diversification as well as enhance returns through institutional bond pricing, transparency and greater liquidity.”

Each ETF comes with a management fee of 0.25% which will be reduced to 0.20% on the year of the fund’s maturity.