Q: What do you think of the RBC Target Bond Index funds. These are designed to synthesize the return on a single bond for a specific year of maturity. Are they likely to be a good place to put some cash for the next year or two ?
5i Research Answer:
RQP holds a portfolio of fixed income instruments till its target maturity. RQP is anticipated to be terminated by September 30th, 2027 where the holdings are investment grade corporate bonds which will be held to maturity in 2027. The fee is OK at 0.23% and it has a decent asset base at $466.7M. We think this type of fund can do well because other bond ETFs are continuosly adding bonds which could impact returns in a declining rate environment. As rates come down, RQP could do well, and we think this is a decent fixed income holding for those who want exposure to a specific maturity date but through a diversified ETF rather than a single bond.