Bond laddering may not have been in vogue during the great bond bull market, but it has traditionally served as an effective tool to protect against interest rate risk. Bill Belden, managing director at Guggenheim Investments, said ladders are making a comeback as yields head higher. ‘The ladder is basically allocating your assets across a set of maturities or exposures and then as those exposures mature, you reinvest, redeploying those proceeds into later-dated maturity,’ said Belden. ‘So really what it does is get out of the predicting game of what’s going to be happening with interest rates, and provides a very constructive and an effective way to allocate fixed income assets.’ Guggenheim enables its investors to create ladders with its BulletShares line of ETFs which provide defined-maturity exposure through portfolios of either investment-grade or high yield corporate bonds. ‘They wed the best aspects of owning a bond ETF or a bond fund with that of owning an individual bond,’ said Belden. ‘So when you are seeking to have a very precise exposure across maturity years, you can use the bullet shares or defined maturity ETFs, which have availability in years between 2015 and 2024 on the investment grade side, to provide that type of position amd that makes it a lot easier to execute on.’
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