eToro adds five new ETFs to its lineup of investment instruments
Online broker eToro today announced the addition of five new unique ETFs to its platform: Target Maturity Bond’ funds.
The list of new assets includes:
This type of bond fund offers the closest experience to owning an individual bond. The fund holds its bonds until they mature, giving the opportunity to lock in current yields. Investors will continue to get the initial yield even if interest rates come down in the future.
These exchange traded funds (ETFs) hold bonds with similar maturity dates and have a fixed life. The bonds in the target maturity funds’ portfolios pay regular interest (coupons). This is distributed to investors on a monthly basis, providing income. Whilst the principal (face value) invested is paid out on maturity when the fund then closes.
They share many of the advantages of traditional bond ETFs. With their broad diversification, easy access, and low cost. Whilst their key difference of a target maturity removes interest rate risk if the fund is held to maturity. This can be especially useful for those saving for specific date events like retirement or buying a house.
They do come with a slightly higher cost than typical bond ETFs and may be less suited for long term savers with needs to reinvest.