A type of exchange traded fund (ETF) that mainly invests in various fixed-income securities such as corporate bonds or government bonds (e.g., treasuries). This fund gives investor exposure to the performance of a diversified basket of fixed-income securities, capitalizing on the fixed income market for considerations like efficiency, liquidity and transparency. Investors can have a steady stream of fixed income to their investments and portfolios, while having the ability to tap into such considerations. The shares in such ETFs are listed on a stock exchange and traded throughout a trading day.
Fixed income ETFs may also offer investors exposure to emerging market debt and inflation-protection bonds. The main uses for fixed income ETFs include liquidity management, strategic asset allocation, tactical asset allocation and derivative replacement.
