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Author: loveoldcars Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76111  
Subject: Maturity Date Bond ETF's Date: 2/19/2011 9:31 AM
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Hi Guys,

Here's a class of bond-etf's I haven't been familiar with, but I'm going to look into!

Maturity-date bond ETFs are unique in that they allow investors to hold a fund to maturity, much in the same way you would an individual bond.

These ETFs track an index of bond issues that come due in the same calendar year. The funds liquidate on December 31 of the listed year, offering investors a payout equivalent to the bonds' face value. Additionally, these funds make monthly distributions. The full value investors receive from these funds is equivalent to the face value of all the underlying holdings plus the sum-total of all yield payouts over the life of the fund.

Maturity-Date ETFs solve a conundrum for fixed-income investors, who in the past had to make a choice between two imperfect options: bond funds or individual bond issues.

Maturity-date bond funds offer the best of both worlds, so to speak. They allow investors to hold to maturity and ride out fluctuations in the yield curve, knowing that when the time comes, they can collect the full face value of the fund. And they get around the concentration risk inherent in holding individual bonds by holding a diversified basket of bond issues that come due in a given calendar year.


http://seekingalpha.com/article/253690-a-guide-to-maturity-d......

rk
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