How They Work

The TD TMB ETFs invest in a portfolio of investment-grade corporate bonds which are hand-picked by the Fixed Income Investment Team at TD Asset Management Inc. (TDAM), offering increased diversification and the chance to generate higher yields when compared to other fixed income products. Each ETF matures in successive years from 2025 to 2027 and is offered in both Canadian and U.S. dollar versions. The suite includes the six following ETFs:

Key Facts

Fund Characteristics

Download file for updated weekly fund characteristics like yield to maturity, average coupon, bond yield and more.

Updated June 20, 2024

Reasons to Invest

• Ease of execution - TD TMB ETFs can be purchased on the Toronto Stock Exchange with no minimum purchase amounts, providing investors with the desired bond exposure for their portfolio.
• Liquidity – An ETF structure allows investors to trade and adjust their bond exposure in response to changing market conditions or evolving investment objectives.
• Yield – TD TMB ETFs can offer competitive yields to GICs or other money market instruments.
• Potential for tax-efficiency - With many corporate bonds trading at a discount, a portion of the total return can be treated as capital gains as opposed to interest income which is taxed at higher rate in a non-registered investment account.
• Aligning investment time horizons – TD TMB ETFs offer the ability to match the time horizon of the investor with the maturity date of the ETF, which allows investors to save for specific financial goals or needs.
• Build laddered portfolios – TD TMB ETFs are an efficient way to help build a laddered portfolio to manage interest rate and/or reinvestment risk. While a traditional bond fund will typically buy and sell individual bonds to maintain an average maturity, a target maturity bond ETF has a fixed target date, and when the ETF closes, investors should receive their principal, similar to individual bond investments.

What Happens at Maturity

The TD TMB ETFs purchase bonds that have a common maturity date. In the maturity year, as the bonds held in the ETF mature, the proceeds are generally invested in cash and cash equivalents or additional investment-grade corporate bonds with maturity in line with the ETF’s maturity date. As the TD TMB ETF nears its maturity date, its yield to maturity should closely reflect prevailing money market yields, its duration will shorten and price volatility should gradually decline. In addition, as maturity approaches, monthly distributions can be expected to decrease, to reflect money market yields being earned. Over this same time period, the ETF’s net asset value per unit will converge toward its par value per unit. When the ETF's maturity date arrives, the ETF is expected to terminate, and investors should receive their principal, similar to individual bond investments.

Comparing Different Types of Fixed Income Offerings

¹Bonds trade over the counter and inventory may be limited
²Most corporate bonds pay coupons on a semi-annual basis
^*ETFs and mutual funds, unlike GICs, are not insured by the Canada Deposit Insurance Corporation (CDIC) or any other deposit insurer nor guaranteed by any entity.

TD TMB ETFs Additional Resources