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iShares Core Canadian Universe Bond Index ETF (XBB)
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TD Target 2025 Investment Grade Bond ETF (TBCE)
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TD Target 2026 Investment Grade Bond ETF (TBCF)
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TD Target 2027 Investment Grade Bond ETF (TBCG)
Q: TD launched a series of Target Maturity Bond ETFs that terminate in Nov of each given year (e.g. TBCF winds up in Nov 2026)
Normally, for Fixed Income, an investor could:
- own individual bonds with exact payment/maturity certainty but very laborious
- own traditional bond ETFs: very easy, but perpetually renewing maturities and mysterious trading prices---often downward, it seems
However these new ETFs seem to offer the best of both worlds.
MER is 0.20 vs XBB 0.10 which isn’t bad.
By TD’s offering chart (May 2), TBCF shows a Yield to Maturity (net of fees) of 4.87%.
Seems like a lot to like here for the individual investor, in Fixed Income.
As a Portfolio Analytics subscriber, the Asset Allocator is unhappy with my dearth of Fixed Income holdings!
Normally, for Fixed Income, an investor could:
- own individual bonds with exact payment/maturity certainty but very laborious
- own traditional bond ETFs: very easy, but perpetually renewing maturities and mysterious trading prices---often downward, it seems
However these new ETFs seem to offer the best of both worlds.
MER is 0.20 vs XBB 0.10 which isn’t bad.
By TD’s offering chart (May 2), TBCF shows a Yield to Maturity (net of fees) of 4.87%.
Seems like a lot to like here for the individual investor, in Fixed Income.
As a Portfolio Analytics subscriber, the Asset Allocator is unhappy with my dearth of Fixed Income holdings!
5i Research Answer:
We think target maturity ETFs make sense, except for one glaring issue: they are all, at least now, very small and not liquid. Most of TDs offerings are less than $5M in assets. Now, an ETF market maker can easily create new units, so buyers can still participate (with limit orders!). The ETF becomes more conservative (with maturities and interest) as it gets closer to its end date. It does make retirement planning easier vs fixed income alternatives. We would not suggest trading these, but they are specifically designed not to trade, anyway. We would just like to see more assets in these.