PSB seeks to replicate, to the extent reasonably possible and before fees and expenses, the performance of the FTSE TMX Canada Investment Grade 1-5 Year Laddered Corporate Bond Index. The index is comprised only of investment-grade corporate bonds rated BBB or higher. The index is divided into five equally weighted segments with staggered maturity levels from one to five years.
Each maturity bucket in the Index contains five bonds, with no more than three of each bucket’s bonds selected from the corporate financial sector. The rest of the bonds in each bucket are selected from the corporate energy, infrastructure and communication sectors.
At the end of June each year, the Index is rebalanced: the bonds in the one-year bucket are sold, and the proceeds are reinvested in five-year bonds; the five-year bonds roll over into the four-year bucket; the four-year bonds roll over into the three-year bucket; and so on. This process ensures that there are always approximately five bonds in each of the maturity buckets.
IFM Investment Tip:
If you are looking for an ETF that uses a strict laddering investment approach for bonds, then this ETF is a great option. Things we like;
- This ETF uses a true 5-bucket schedule for managing bond maturities. One bucket for each year from 1 to 6 years. (Yes, I know the ETF's title says 1-5 years, but the ETF doesn't hold anything under 1 year, so it actually holds bonds out to 6 years in maturity.)
- It holds 10 bonds in each of the 5 buckets.
- Each bucket will be equally weighted - holding the same $ investment in each of the 5 buckets (just like we like them!)
- The maturing bucket of bonds will automatically be reinvested in new bonds in the longest index maturities (bucket) - 5.0 to 5.99 years. (just like a true bond ladder!)
- At 0.25%, the ETF's management fee is very reasonable
- This ETF purchases regular bonds which may be priced above their par or maturity values. This characteristic creates a possible double taxation of interest income distributed. To avoid the potential of double taxation, you can buy and hold this ETF within a tax-free (TFSA) or tax-deferred account (RRSP, RRIF, RESP, etc.)
- This ETF has an extremely high Portfolio Turn Over Ratio - 162.89% in 2016, 141.67% in 2015 and 148.57% in 2014. This is much higher than the 20%-or-so-rate we would have anticipated.
- Fact Sheet
- TMX Money ETF Screener
- Morningstar ETF Screener
- Underlying Index/Commodity
- FTSE TMX Canada Investment Grade 1-5 Year Laddered Corporate Bond Index
- Asset Category
- Fixed Income Investments
- Average Duration
- 3.20 years (August 31, 2017)
- Average Maturity
- Date Established
- July 15, 2011
- Annual Management Fee
- 0.25% plus 0.03% Operating Expenses(2016)
- Trading Expense Ratio (TER)
- 0.00% (2016)
- Management Expense Ratio (MER)
- 0.28% (2016)
- Additional Performance Fee(s)
- Yes - In 2016, the ETF had a yield equal to 3.72% net of Return of Capital (ROC) payments.
- Distribution Dates
- Distribution Details
- Dividend Reinvestment Plan (DRIP)
- Yes Visit ETF Website for details
- Rebalancing Frequency
- Annual - At the end of June
- Portfolio Turnover Ratio
- Was 162.89% in 2016, 141.67% in 2015, 148.57% in 2014, 136.56% in 2013, 85.90% in 2012 and 29.92% in 2011
- Simplified Prospectus
- Last Updated