How These Fixed Income Bond ETFs Use Laddered Bonds

So, Northern Trust Asset Management unveiled 11 new fixed income ETFs.

So, congratulations.

Which segments of the bond market are these recently launched ETFs targeting? >> The first three are really expanding our capabilities with municipal bonds.

Uh, Northern Trust has been working with municipal bonds for 30 years.

We have 17 investment professionals with an average of 18 years experience in the MUN bond space, but these are our first three that are passively tracking uh in the ETF vehicle, the municipal bond space.

So there's three of them uh that cover different uh maturity segments of the municipal bond market.

So there's uh the the short duration or short maturity which is T AXS taxes that covers the one to five space.

There's an intermediate uh maturity space T A T A XI so taxi and then finally there's a full uh municipal bond curve one that's T A XT that covers you know the full maturity of of the municipal bond curve.

So really this is expanding our capabilities for our clients uh giving them new tools to use in their portfolio.

Uh and that's the first three and then the other eight are really split between two different product segments uh and two different sets of distributing ladder ETFs.

And this is a really a new concept that's out there in the market today. uh very similar to a traditional ladder where you're owning multiple rungs uh more or multiple years of bonds that you're stringing together into a ladder.

And so what that does is that helps you from an interest rate sensitivity standpoint because you're owning those bonds till they mature at par value.

And so you don't have to really worry as much about interest rate exposure.

And typically way a traditional bond ladder works is when those bonds mature, you go out and invest in the next rung that you would.

So if it was a 1 to 10ear ladder, you would be taking that first year and buying the 11th year.

So it's always a 10-year bond ladder.

What distributing ladders do is and when those bonds mature at the end of the year, we're going to be returning capital back to investors.

So it's offers all the benefits of a traditional ladder, but with an additional benefit of really becoming a really powerful cash flow management and financial planning tool for investors to use in their portfolio.

So really cool.

There's four uh in each set.

So four four of those will cover inflation linked bonds.

So using tip securities and then the other four will also be MUN securities offering tax exempt income on top of that.

And each set will have bonds covering 5, 10, 20, and 30 years.

So, you're talking about being able to buy a 30-year MUN bond ladder with one single ticker purchase.