Gathering appealing long-term interest rates using these two specific types of Exchange-Traded Funds (ETFs)
In the current economic climate, many investors in Germany are seeking alternatives to traditional fixed-term deposits, which have seen a decrease in attractiveness due to expected interest rate cuts by the European Central Bank. This has led to a reduction in fixed-term deposit offers from banks.
Two potential alternatives that have emerged are Exchange-Traded Funds (ETFs) and Fixed Maturity products, offered by companies such as BlackRock and Amundi.
ETFs, while not offering the same level of security as fixed-term deposits, can be more attractive due to advantages such as coverage by certain assets, no minimum or maximum investment amount, and the potential for higher returns. However, it's important to note that prices of ETFs can fluctuate significantly until maturity, posing risks for investors.
One such ETF is the iBond from BlackRock. These products diversify investors' portfolios across high-rated corporate bonds, aiming to minimize total loss risks and generate attractive yields. However, investors should be aware of the risks associated with corporate bonds, as iBonds are not backed by the full faith and credit of a government.
On the other hand, Amundi Fixed Maturity products are based on European government bonds, offering similar security to accounts protected by the European deposit insurance scheme. The yield for the 2028 variant (WKN: ETF165) of Amundi Fixed Maturity products is currently 2.63%.
Another ETF product family suitable for securing attractive long-term interest rates includes offerings from iShares, Lyxor, and Xtrackers. These ETFs are based on indices such as the STOXX Europe 600 and EURO STOXX 50, with various dividend distribution options. Xtrackers, for example, provides a physical replication ETF on the EURO STOXX 50 with low total expense ratios.
The base interest rate for the 2028 iBond variant (WKN: A3D8E7) from BlackRock is currently 3.25%.
It's worth mentioning that both iBonds from BlackRock and Amundi Fixed Maturity products provide regular distributions of interest.
When considering ETFs as a replacement for fixed-term deposits, it's essential to remember that they may not be suitable for all investors. The maturity date is crucial for ETF investments, as they should ideally be held until maturity. It is best to hold ETFs until the maturity date to fully benefit from the potential returns.
For those seeking alternatives to ETFs, the BÖRSE ONLINE Fixed-term Deposit Comparison can be a helpful resource.
In conclusion, while ETFs and Fixed Maturity products offer attractive long-term interest rates and provide a different investment experience compared to fixed-term deposits, they also present potential risks and require careful consideration. Investors should weigh these factors before making a decision.
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