Oh bother. I totally got that wrong. Thanks for the correction. So when you want a ladder, you should just buy the treasuries directly, the ETF doesn't buy you anything. There are still 3 valid use cases that I can see though(one is arguably very niche):Not sure about your terminology, they can be ladder components maybe, but a single target maturity fund is not a bond ladder.They offer normal constant duration bond funds, like BND AND they offer ladder ETF's or target maturity date bond funds, which are bond ladders.To make a ladder you would have to buy a bunch of target maturity bond ETFs. Perhaps you have misunderstood what these ETFs are? If you buy the one for 2030 TIPS, it holds only the TIPS that mature in 2030 (all two of them).A single ETF instead of a bunch of individual bond purchases.
If you have a future expense you are trying to save up for, say a house downpayment, then these ETF's might be useful/convenient.
The other(very niche) use case would be if you need to hold TIPS in taxable and you really don't like the "phantom" income problem they represent, you can buy the TIPS ETF version, and make the ETF handle the "phantom" income problem for you.
The third, GAAP mentioned, you are slowly building the ladder over time.
Are there any other use cases for these that anyone can think of?
Thanks again for the correction!
Statistics: Posted by zie — Mon Mar 25, 2024 11:49 pm — Replies 26 — Views 2477