RBC Global Asset Management has announced final details regarding the scheduled maturity of RBC Target 2013 Corporate Bond Index ETF (TSX: RQA).
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As announced earlier this year, the ETF will mature effective at the close of business on Friday, November 22, 2013. As a result, no direct subscriptions for units of RQA will be accepted after the close of business today, Friday September 13, 2013.
Redemption requests for the RBC Target 2013 Corporate Bond Index ETF are expected to be accepted until the close of business on Friday November 15, 2013. RQA is anticipated to be voluntarily delisted from the TSX, at the request of RBC GAM, following the close of business on or about Tuesday, November 19, 2013. All units still held by investors following delisting will be subject to mandatory redemption on the maturity date of Friday, November 22, 2013.
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The proceeds from RQA may be invested into a subsequent maturity of an RBC Target Maturity Corporate Bond ETF or utilized in a ladder strategy to help manage interest rate and reinvestment risk.
Unlike traditional ETFs, which have a perpetual life, target-maturity ETFs have a specified maturity date established when the ETF is launched. When the ETF reaches the maturity date, the ETF’s final net asset value (NAV) is returned to the current unit holders.
A target maturity ETF’s portfolio contains fixed income securities that mature throughout its stated maturity year. This structure results in a duration profile similar to that of an individual bond, where the ETF’s duration should decline as it approaches maturity, reducing sensitivity to interest rate changes.