Fixed-Term Bond ETFs: Investing for a Specific Date

What is a bond?

A bond is a loan made by an investor to a company or government.

When you invest in a bond, you typically receive regular interest payments (known as coupons) as well as the repayment of your initial investment at a fixed maturity date.

ETFs, ETCs and other ETPs: what’s the difference?

ETP is an umbrella term covering several types of exchange‑traded investments.

• ETFs (exchange-traded funds) Typically invest in a basket of assets, such as shares or bonds, and are commonly used for diversified investing.
• ETCs (exchange-traded commodities) Aim to track the price of a single commodity, such as gold, oil or wheat.
• Other ETPs Some track the price of a single asset, such as a digital asset, rather than a group of investments.

While they share similar trading features, they differ in their structure depending on what they aim to track.

In short: ETPs are a broad category of exchange-traded investment products.

What are fixed-term bond ETFs?

Fixed-term bond ETFs are exchange-traded funds that invest in bonds designed to mature in a specific year, providing a defined investment horizon.

This means:

• The bonds within the ETF have similar maturity dates
• The ETF itself has a planned end date
• At maturity, capital is returned, subject to market conditions

Fixed-term bond ETFs vs. traditional bond ETFs

Traditional bond ETFs and fixed-term bond ETFs differ in how they manage maturities.

Traditional bond ETFs:

• Continuously replace maturing bonds with new ones
• Do not have a fixed end date
• Provide ongoing exposure to bond markets

Fixed-term bond ETFs:

• Have a defined end date
• Invest in bonds that mature in the same year
• Aim to return capital at maturity

Because of this structure, fixed-term bond ETFs can feel similar to fixed-term savings accounts, while still offering access to capital markets. This can make it easier to match investments to a specific time horizon.

In short: traditional bond ETFs are ongoing, while fixed-term bond ETFs are time-defined.

Example: Investing towards a specific date or goal

If you plan to buy a home in 2031, you might choose a fixed-term bond ETF maturing around 2030. Instead of holding cash in a low‑interest account, this approach allows you to invest with a clear goal and timeframe in mind, helping align your money with when you expect to need it.

Similar to fixed-term deposits - but different

Fixed-term bond ETFs share some similarities with fixed-term deposit accounts, including:

• A defined investment horizon
• Support for forward planning

However, there are important differences:

• They invest in capital market instruments
• Their value can fluctuate over time
• Returns depend on market conditions

In short: Fixed-term bond ETFs offer a structured investment approach similar to deposits, but with exposure to capital markets

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed.

When can fixed-term bond ETFs be useful?

They may be considered by investors who:

• Are saving towards a specific date
• Have planned future spending needs
• Are looking for alternatives to traditional savings products
• Prefer combining income with a defined investment horizon