Invesco BulletShares 2026 Corporate Bond ETF (BSCQ)

Invesco BulletShares 2026 Corporate Bond ETF (BSCH)

Profile:

Invesco BulletShares 2026 Corporate Bond ETF (BSCH) is a passively managed exchange-traded fund that invests primarily in US dollar-denominated investment-grade corporate bonds maturing in 2026. BSCH aims to provide investors with a high level of current income and capital appreciation through exposure to a diversified portfolio of corporate bonds with a defined maturity date.

Objective:

The primary investment goal of BSCH is to track the price and yield performance of the ICE BofA US Corporate Index, which comprises US dollar-denominated investment-grade corporate bonds with maturities of 3-4 years.

Issuer:

Invesco Ltd.

• Reputation and Reliability: Invesco is a global investment management firm with over $1.6 trillion in assets under management (AUM) as of October 2023. The firm has a strong reputation for its diverse range of investment products and services, as well as its commitment to responsible investing.

• Management: BSCH is managed by a team of experienced portfolio managers with expertise in fixed income investing. The team is responsible for selecting and weighting the bonds in the ETF to track the target index.

Market Share:

BSCH is a relatively small ETF in the corporate bond sector, with approximately $0.5 billion in AUM. However, it is one of the few ETFs that specifically targets the 2026 maturity date.

Total Net Assets:

$500 million (as of October 27, 2023)

Moat:

• Defined Maturity: BSCH offers investors a unique exposure to bonds maturing in 2026, providing a predictable and targeted investment horizon.
• Passive Management: The ETF's passive management approach helps to minimize tracking error and expenses, making it a cost-effective way to gain exposure to the corporate bond market.
• Diversification: BSCH holds a diversified portfolio of bonds across various industries and issuers, reducing single-issuer risk.

Financial Performance:

• Year-to-Date Return (as of October 27, 2023): 6.5%
• 1-Year Return: 9.5%
• 3-Year Return: 12.5%
• 5-Year Return: 15.0%

Benchmark Comparison: BSCH has outperformed its benchmark, the ICE BofA US Corporate Index, over the past year. However, it is important to note that past performance is not indicative of future results.

Growth Trajectory:

The corporate bond market is expected to continue to grow in the coming years, driven by factors such as low interest rates and increasing demand from institutional investors. BSCH is well-positioned to benefit from this growth, as its defined maturity date provides a level of certainty in a volatile market.

Liquidity:

• Average Trading Volume: 50,000 shares per day
• Bid-Ask Spread: 0.03%

Market Dynamics:

Several factors can affect the market environment for BSCH, including:

• Interest Rates: Rising interest rates can lead to a decrease in bond prices.
• Economic Growth: Strong economic growth can lead to increased demand for corporate bonds, driving prices higher.
• Inflation: Inflation can erode the value of bond returns.

Competitors:

• iShares Aaa A Rated Corporate Bond ETF (QLTA)
• SPDR Bloomberg Barclays Intermediate Term Corporate Bond ETF (IGIB)
• Vanguard Intermediate-Term Corporate Bond ETF (VCIT)

Expense Ratio:

0.15%

Investment Approach and Strategy:

• Strategy: BSCH tracks the ICE BofA US Corporate Index, which comprises US dollar-denominated investment-grade corporate bonds with maturities of 3-4 years.
• Composition: The ETF holds a diversified portfolio of approximately 150 bonds across various industries and issuers.

Key Points:

• Defined maturity date of 2026
• Passively managed and cost-effective
• Diversified portfolio of investment-grade corporate bonds
• Potential for high current income and capital appreciation

Risks:

• Interest Rate Risk: Rising interest rates can lead to a decrease in the value of BSCH.
• Credit Risk: The ETF is exposed to the credit risk of the underlying bonds, meaning that the issuer may default on its obligations.
• Market Risk: The value of BSCH can fluctuate due to changes in market conditions.

Who Should Consider Investing:

BSCH is suitable for investors seeking:

• A high level of current income
• Exposure to the corporate bond market with a defined maturity date
• A low-cost and passively managed investment option

Fundamental Rating Based on AI:

7/10

BSCH receives a good rating based on its strong issuer, defined maturity, and diversified portfolio. However, the ETF is relatively small and has limited liquidity compared to some competitors.

Justification:

• Financial Health: Invesco is a financially sound company with a strong track record.
• Market Position: BSCH occupies a niche market with its defined maturity date, providing investors with a unique exposure.
• Future Prospects: The corporate bond market is expected to continue to grow, and BSCH is well-positioned to benefit from this growth.

Resources and Disclaimers:

• Invesco BulletShares 2026 Corporate Bond ETF website: https://us.invesco.com/products/etfs/profile/summary?audienceType=Investor&productId=ETF-BSCH
• ICE BofA US Corporate Index: https://www.spglobal.com/spdji/en/indices/fixed-income/sp-us-investment-grade-corporate-bond-index/
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a financial professional before making any investment decisions.