How ETFs can help you access professionally managed laddered bond portfolios
ETFs can play an essential role in an investor’s overall investment strategy. They offer numerous benefits including diversification (providing exposure to various asset classes or geographic regions), transparency (portfolio composition information available daily), liquidity (listed on an exchange) and cost (MERs are generally low).
There are a couple ways to implement the laddered bond strategy with ETFs:
1. Create the bond ladder yourself
You can buy multiple bond ETFs, such as RBC Target Maturity Corporate Bond ETFs, separately to create your own ladder and customize your investing experience.
2. Buy a managed ladder bond portfolio
To go this route, choose a product like one of RBC’s Laddered Bond ETFs:
- RBC 1–5 Year Laddered Corporate Bond ETF (RBO) is a laddered bond ETF that invests in an equal-weighted portfolio of five RBC Target Maturity Corporate Bond ETFs with maturity dates ranging from 1 to 5 years. RBO offers attractive regular monthly income, broad diversification, and reinvests the maturing capital on a continuous basis.
- RBC 1-5 Year Laddered Canadian Bond ETF (RLB) holds 70% of its portfolio in Canadian investment-grade corporate bonds through RBC Target Maturity Bond ETFs, and 30% directly in Canadian government bonds. The bonds are equally weighted by maturity year, which provides consistent liquidity. The ETF also reinvests the maturing capital on a continuous basis.
- RBC 6-10 Year Laddered Canadian Corporate Bond ETF (RMBO) is a rules-based actively managed ETF that aims to provide exposure to the performance of a diversified portfolio of investment grade corporate bonds, divided into five segments with staggered maturities from 6 to 10 years that will provide regular income while preserving capital.