Claymore’s #1 and #2 ETFs by assets under management are the Claymore 1-5 Year Laddered Corporate Bond ETF (TSX: CBO) and the Claymore 1-5 Year Laddered Government Bond ETF (TSX: CLF). So, it’s not very surprising that Claymore’s two newest ETFs are similar products moving up the yield curve. The Claymore 1-10 Year Laddered Government Bond ETF (TSX: CLG) and the Claymore 1-10 Year Laddered Corporate Bond ETF (TSX: CBH) started trading on the TSX today.
The Claymore 1-10 Year Laddered Government Bond ETF (TSX: CLG) holds 53 bonds with maturities ranging from 1 year to 10 years issued by the Federal and Provincial Goverments. The laddering strategy is implemented by reinvesting maturing bonds in a new 10 year bond. The MER of the ETF is 0.17%, the yield-to-maturity is 1.82% and the duration is 4.36 years.
The Claymore 1-10 Year Laddered Corporate Bond ETF (TSX: CBH) holds 56 investment grade corporate bonds with maturities ranging from 1 year to 10 years. The MER of the ETF is 0.28%, the yield to maturity is slightly higher at 2.79% and the duration is 4.14 years.
One or both these ETFs will be of interest to investors looking for broad exposure to the bond market. The duration (a measure of the sensitivity of bond prices to interest rate changes) of both these ETFs is higher than the iShares DEX Short Term Bond ETF (TSX: XSB, MER: 0.27%, YTM: 1.68%, Duration: 2.61) and lower than the iShares DEX Universe Bond ETF (TSX: XBB, MER: 0.32%, YTM: 2.57%, Duration: 6.43). But the MERs are quite a bit lower than both iShares ETFs and you can lower the cost of owning even further if you can buy these ETFs without a commission.
A couple of points to note: despite the name, the Claymore Laddered Bond ETFs are not quite the same as a bond ladder an investor could construct herself because unlike a ladder, the investor has no control over reinvesting maturing bonds in the ETF. Therefore the ETFs are only suitable holdings for long-term investors who are will be reinvesting maturing bonds indefinitely. Also note that the cash yield of these ETFs is quite a bit higher than the YTM, which all things being equal implies that the ETF will experience a drop in the price level over time.
