Originally Posted by brewer12345
Actually, I would say this is not a great product for junk. Junk bonds rarely actually mature. Instead they are almost always called prior to maturity and the timing is uncertain. So a set maturity fund holding junk would have a lot of reinvesting to do starting 3 or 4 years before target maturity.
I didn't think about the mechanics of managing it. You may be right.
What I was thinking about was the return of principle.
HY Bonds seem to act somewhat like stocks (but different). Depending on the business cycle and related credit risk, the value goes up or down. Yet they are a debt obligation that usually pays a decent coupon.
An open-ended fund essentially puts the investor into riding the valuation wave and/or timing the exit. On the other hand an end date ETF would have a maturity date and return the principle at par (if one did not exit early).
I'll admit that have not thought this out fully. But it would seem to open up a new option that might be beneficial in some ways.