1. Home
  2. Education

BulletShares® ETF Education

Possessing an innovative maturity feature that makes them useful in planning date specific objectives, it’s important to understand the BulletShares® ETFs structure, uses and unique maturity process.¹

What are BulletShares?

BulletShares® ETF is an exchange traded fund investing in a diversified portfolio of select individual bonds that all mature or are anticipated to be called in the same year – its defined maturity date. Upon reaching its maturity date, the assets held by the BulletShares® ETF will be returned to its shareholders.¹ BulletShares® ETFs may invest in either investment grade or high yield corporate bonds.

For example, Guggenheim BulletShares 2020 Corporate Bond ETF (BSCK) holds over 100 individual investment grade corporate bonds that have effective maturities in the year 2020. Near the end of 2020, it’s planned that BSCK will return its assets to its shareholders, less any outstanding expenses.

Understanding Defined Maturity ETFs
Learn more about the structure and operation of BulletShares® ETFs, as well as their multiple uses in an investment portfolio.

The BulletShares Maturity Process

BulletShares® ETFs are comprised of individual bonds that all mature or are expected to be called in a specific year. While a traditional fixed-income ETF or mutual fund regularly buys and sells its underlying bonds to maintain a fixed duration, BulletShares® ETFs hold their bonds until they mature. This results in a more bond-like experience with a BulletShares® ETF’s duration shortening as it nears maturity.

In its final year, as a BulletShares® ETF’s underlying bonds mature, the proceeds from these bonds are typically invested in cash or cash alternatives. As the year progresses, the ETF’s cash and U.S. Treasury positions grow and its bond exposure decreases. Finally, at the end of the calendar year, the BulletShares® ETF terminates and the fund assets, less any fees and expenses of the fund, are distributed to shareholders.¹

To date, Guggenheim has successfully transitioned all of its maturing BulletShares® ETFs: four corporate bond BulletShares® ETFs and three high yield corporate bond ETFs.

Understanding the Maturity Process
Understanding the Maturity Process
With an innovative maturity feature that makes BulletShares® ETFs truly different from most other funds, it’s important to understand their maturity process and what to expect as these ETFs near maturity.

Simplifying Bond Ladders

A bond ladder is a portfolio of bonds with varying terms to maturity. Investing in several bonds with different maturity dates, rather than one bond with a single maturity date, may help minimize interest-rate risk and increase liquidity. As bonds in a laddered portfolio mature, the cash distribution may be used to cover lifestyle needs (such as, college tuition or retirement expenses) or reinvested in new bonds at the longest maturity of the ladder at the current interest rate.

Bond laddering offers a number of potential benefits, but creating bond ladders with individual bonds can be time consuming and cost prohibitive. In contrast, BulletShares® ETFs can be used to create new or manage existing bond ladders, offering investors a cost effective and convenient approach to portfolio laddering.

Guggenheim BulletShares® ETF Bond Laddering Tool

Guggenheim has launched the web-based BulletShares® ETF Bond Laddering Tool, which generates custom hypothetical illustrations of BulletShares laddered strategies based on desired maturity and credit criteria.


Access Financial Professional Resources

  • Ladder Management with Guggenheim's Fixed Income ETFs
  • Solution to Bond Laddering in a Challenging Environment
  • An In-Depth Look at Defined Maturity ETFs
  • Anatomy of the BulletShares Maturity Process


¹ The Funds have designated years of maturity ranging from 2016 to 2026 and will terminate on or about December 31st of their respective maturity year. In connection with such termination, each Fund will make a cash distribution to then-current shareholders of its net assets after making appropriate provisions for any liabilities of the Fund. The Funds do not seek to return any predetermined amount at maturity. In the final six months of operation, as the bonds held by the Fund mature, the Fund's portfolio will transition to cash and cash equivalents, including without limitation U.S. Treasury Bills and investment-grade commercial paper, which may result in a lower yield than the yields of the bonds previously held by the Fund and/or prevailing yields for bonds in the market. The Funds will terminate on or about the date above without requiring approval by the Trust's Board of Trustees (the "Board") or Fund shareholders. The Board may change the termination date to an earlier or later date if a majority of the Board determines the change to be in the best interest of the Funds.

Investors should consider the following risk factors and special considerations associated with investing in the fund, which may cause you to lose money, including the entire principal amount that you invest. Interest Rate Risk: As interest rates rise, the value of fixed-income securities held by the fund are likely to decrease. Securities with longer durations tend to be more sensitive to interest rate changes, making them more volatile than securities with shorter durations. Credit/Default Risk: Issuers or guarantors of debt instruments or the counterparty to a repurchase agreement or loan of portfolio securities may be unable or unwilling to make timely interest and/or principal payments or otherwise honor its obligations. Debt instruments are subject to varying degrees of credit risk, which may be reflected in credit ratings. Securities issued by the U.S. government generally have less credit risk than debt securities of nongovernment issuers. High-Yield Securities Risk: High yield securities generally offer a higher current yield than that available from higher-grade issues, but typically involve greater risk. Securities rated below investment grade are commonly referred to as “junk bonds.” The ability of issuers of high-yield securities to make timely payments of interest and principal may be adversely impacted by adverse changes in general economic conditions, changes in the financial condition of the issuers and price fluctuations in response to changes in interest rates. Asset Class Risk: The bonds in the fund’s portfolio may underperform the returns of other bonds or indexes that track other industries, markets, asset classes or sectors. Call Risk/Prepayment Risk: During periods of falling interest rates, an issuer of a callable bond may exercise its right to pay principal on an obligation earlier than expected. This may result in the fund’s having to reinvest proceeds at lower interest rates, resulting in a decline in the fund’s income. Extension Risk: An issuer may exercise its right to pay principal on an obligation later than expected. This may happen when there is a rise in interest rates. Under these circumstances, the value of the obligation will decrease and the fund’s performance may suffer from its inability to invest in higher-yielding securities. Income Risk: Falling interest rates may cause the fund’s income to decline. Liquidity Risk: If the fund invests in illiquid securities or securities that become illiquid, fund returns may be reduced because the fund may be unable to sell the illiquid securities at an advantageous time or price. Declining Yield Risk: During the final year of the fund’s operations, as the bonds held by the fund mature and the fund’s portfolio transitions to cash and cash equivalents, the fund’s yield will generally tend to move toward the yield of cash and cash equivalents and thus may be lower than the yields of the bonds previously held by the fund and/or prevailing yields for bonds in the market. Fluctuation of Yield and Liquidation Amount Risk: The fund, unlike a direct investment in a bond that has a level coupon payment and afixed payment at maturity, will make distributions of income that vary over time. Unlike a direct investment in bonds, the breakdown of returns between fund distributions and liquidation proceeds are not predictable at the time of your investment. For example, at times during the fund’s existence, it may make distributions at a greater (or lesser) rate than the coupon payments received on the fund’s portfolio, which will result in the fund returning a lesser (or greater) amount on liquidation than would otherwise be the case. The rate of fund distribution payments may adversely affect the tax characterization of your returns from an investment in the fund relative to a direct investment in corporate bonds. If the amount you receive as liquidation proceeds upon the fund’s termination is higher or lower than your cost basis, you may experience a gain or loss for tax purposes. Financial Services Sector Risk: The financial services industries are subject to extensive government regulation, can be subject to relatively rapid change due to increasingly blurred distinctions between service segments, and can be significantly affected by availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, and price competition. Consumer Discretionary Sector Risk: The success of consumer product manufacturers and retailers is tied closely to the performance of the overall domestic and international economy, interest rates, competitive and consumer confidence. Success depends heavily on disposable household income and consumer spending. Concentration Risk: If the index concentrates in an industry or group of industries, the fund’s investments will be concentrated accordingly. In such event, the value of the fund’s shares may rise and fall more than the value of shares of a fund that invests in securities of companies in a broader range of industries. In addition the funds are subject to: Non-Correlation Risk, Replication Management Risk, Issuer- Specific Changes and Non-Diversified fund Risk. Please read the fund’s prospectus for more detailed information on these risks and considerations.

BulletShares®, BulletShares® USD Corporate Bond Index, and BulletShares® USD High Yield Corporate Bond Index are trademarks of Accretive Asset Management LLC and have been licensed for use by Guggenheim Investments. Accretive Asset Management, LLC is an affiliate of Guggenheim Investments.

©2016 Guggenheim Investments. All Rights Reserved.

• Not FDIC Insured • No Bank Guarantee • May Lose Value

Read the fund’s prospectus and summary prospectus (if available) carefully before investing. It contains the fund’s investment objectives, risks, charges, expenses and other information, which should be considered carefully before investing. To obtain a prospectus and summary prospectus (if available), click here.

The referenced funds are distributed by Guggenheim Funds Distributors, LLC. Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC ("Guggenheim"), which includes Guggenheim Partners Investment Management ("GPIM"), the investment advisors to the referenced funds. Guggenheim Funds Distributors, LLC, is affiliated with Guggenheim, SI, and GFIA.