BTPs or bond ETFs: what are the differences?

BTPs and bond ETFs both give you exposure to the bond market, but they work differently. A BTP is a single bond issued by the Italian state. A bond ETF is an exchange-traded fund that holds a basket of bonds.

Maturity and repayment

A traditional BTP has a fixed maturity date and defined repayment terms. A traditional bond ETF, by contrast, generally keeps a rolling portfolio and does not repay your investment on a single date.

There are also fixed-maturity bond ETFs, which behave differently from traditional funds.

Diversification

Buying a single BTP means a specific exposure to Italian government debt. An ETF can spread your money across several issuers and maturities, depending on what it holds.

Costs and risks

When comparing the two, check:

• Trading commissions.
• The fund's ongoing charges, where applicable.
• The bid-ask spread.
• Sensitivity to interest rates.
• Credit risk.
• Tax treatment.

There is no answer that fits every investor: the two instruments are built differently.

Explore the yield and risk of individual bonds