"Earning consistent high returns over the long term: Exploring ETFs that guarantee high interest rates"
In the current economic climate, where fixed-term deposits have become less attractive due to tightened conditions and lower returns, investors are seeking alternatives to secure high interest rates for longer periods. One such option is Exchange-Traded Funds (ETFs) with fixed maturity dates.
Unlike traditional fixed-term deposits, ETFs do not have deposit protection but act as creditors to a diversified basket of companies instead of a single bank. This diversification of investment and lack of a single point of failure is one of the key advantages of using ETFs.
One such ETF is the Invesco BulletShares 2029 EUR Corporate Bond UCITS ETF (WKN: A400MA), which offers a current annual yield of 3.04% for five years. This ETF, along with other fixed-maturity ETFs, provides a level of diversification not typically found in traditional fixed-term deposits.
These ETFs, such as the Invesco BulletShares ETF, are not deposit-protected. However, ETFs that invest widely diversified in corporate bonds are default-proof. For example, ETFs investing in floating rate notes (FRNs) or investment-grade corporate bonds can offer higher yields compared to standard government bonds.
Providers like WisdomTree and PGIM offer fixed income ETFs with target maturity structures or floating-rate/investment-grade corporate bond exposure. These ETFs can provide a bond ladder-like structure with predictable maturity, sometimes called "target maturity" or "defined maturity" bond ETFs.
Short-term bond ETFs, which typically have maturities under 5 years and are less sensitive to rate changes, are also suitable options for investors seeking a balance of yield and safety comparable to fixed deposits.
Brokerage or ETF issuer websites and ETF screeners can help find ETFs with defined maturities that fit your yield goals. Look for products labeled "target maturity," "defined maturity," or "corporate bond ladder" ETFs.
It is possible to replicate a fixed-term deposit using an ETF with a fixed maturity date. For comparison, you can refer to the BÖRSE ONLINE Fixed-Term Deposit Comparison.
In summary, look for fixed income ETFs offering target maturity structures or floating-rate/investment-grade corporate bond exposure as alternatives to fixed-term deposits with competitive interest yields. These ETFs can serve as high-quality alternatives to fixed deposits, providing a longer-term investment option for investors. Other products similar to the Invesco ETF include iBonds from BlackRock and Target-ETFs from Xtrackers.
Investing in ETFs, such as the Invesco BulletShares 2029 EUR Corporate Bond UCITS ETF, presents an opportunity to secure high-interest rates for longer periods, an alternative to the less attractive fixed-term deposits in the current economic climate. This diversified investment vehicle, unlike traditional fixed-term deposits, offers advantages like lack of a single point of failure and the potential for higher yields compared to standard government bonds. Additionally, technology in the form of brokerage websites and ETF screeners can assist in finding ETFs with defined maturities that fit your yield goals, providing a longer-term investment option for investors.
