Invesco BulletShares 2024 High Yield Corporate Bond ETF (BSJO)BSJO

Invesco BulletShares 2024 High Yield Corporate Bond ETF (BHYC)

Profile

Invesco BulletShares 2024 High Yield Corporate Bond ETF is a passively managed ETF that seeks to track the performance of the ICE BofA US High Yield Non-Financial Corporate Constrained Index. The ETF invests primarily in U.S. dollar-denominated high-yield corporate bonds maturing on or before December 31, 2024, with a focus on non-financial companies. BHYC offers investors exposure to the high-yield corporate bond market with a specific maturity date, providing potential for capital appreciation and high current income.

Objective

The primary investment goal of BHYC is to provide investors with:

• High current income: The ETF invests in high-yield bonds, which typically offer higher interest payments than investment-grade bonds.
• Capital appreciation: As the bonds in the ETF mature, their price may appreciate to their par value.
• Reduced interest rate risk: By focusing on bonds maturing in 2024, the ETF aims to minimize the impact of potential interest rate fluctuations on its portfolio.

Issuer

Invesco Ltd. is a global asset management firm with over $1.6 trillion in assets under management. Founded in 1935, Invesco has a long history of providing investment solutions to individuals and institutions worldwide.

Reputation and Reliability: Invesco is a well-established and reputable firm with a strong track record in the asset management industry. The firm adheres to high ethical standards and is committed to client satisfaction.

Management: Invesco's ETF management team consists of experienced professionals with expertise in fixed income investing and portfolio construction. The team utilizes a rigorous research process to select bonds for the ETF's portfolio.

Market Share

BHYC has a market share of approximately 0.4% within the high-yield corporate bond ETF segment.

Total Net Assets

As of January 31, 2023, BHYC has approximately $1.2 billion in total net assets.

Moat

• Specific Maturity Focus: With its focus on bonds maturing in 2024, BHYC offers a unique exposure to the high-yield corporate bond market with a defined maturity date. This strategy can be appealing to investors seeking short-term income and capital appreciation potential.
• Experienced Management: Invesco's experienced ETF management team brings expertise in fixed-income investing and portfolio construction, ensuring a well-managed portfolio within the high-yield space.

Financial Performance

Historical Performance: BHYC has generated a total return of 9.61% since its inception in February 2022.

Benchmark Comparison: BHYC has outperformed its benchmark, the ICE BofA US High Yield Non-Financial Corporate Constrained Index, since its inception.

Growth Trajectory

The high-yield corporate bond market is expected to continue growing in the coming years, driven by factors such as corporate borrowing and low-interest rates. BHYC, with its specific maturity focus, is well-positioned to benefit from this growth trend.

Liquidity

• Average Trading Volume: BHYC has an average daily trading volume of approximately 100,000 shares.
• Bid-Ask Spread: The bid-ask spread for BHYC is typically around 0.05%.

Market Dynamics

• Economic Indicators: Economic growth and interest rate policy can significantly impact the high-yield corporate bond market. A strong economy and low-interest rates generally favor the market, while a weakening economy and rising interest rates can put pressure on high-yield bonds.
• Sector Growth Prospects: The performance of individual sectors within the high-yield corporate bond market can vary depending on their growth prospects and specific economic conditions.
• Current Market Conditions: Market volatility and investor sentiment can also influence the high-yield corporate bond market.

Competitors

• iShares iBoxx $ High Yield Corporate Bond ETF (HYG): Market share - 40.2%
• SPDR Bloomberg Barclays High Yield Bond ETF (JNK): Market share - 26.5%
• VanEck Merk High Yield ETF (HYLD): Market share - 3.2%

Expense Ratio

The expense ratio for BHYC is 0.35%, which is considered low compared to other high-yield corporate bond ETFs.

Investment Approach and Strategy

Strategy: BHYC employs a passive management strategy, seeking to track the performance of its benchmark index.

Composition: The ETF primarily invests in U.S. dollar-denominated high-yield corporate bonds maturing on or before December 31, 2024, with a focus on non-financial companies.

Key Points

• High current income potential
• Reduced interest rate risk
• Specific maturity date provides clarity on investment horizon
• Experienced management team
• Competitive expense ratio

Risks

• Volatility: High-yield bonds are considered to be more volatile than investment-grade bonds, meaning their prices can fluctuate more significantly.
• Market Risk: The value of BHYC's holdings can be affected by various factors, including changes in interest rates, economic conditions, and issuer creditworthiness.
• Credit Risk: As BHYC invests in high-yield bonds, there is a risk that the issuers of these bonds may default on their obligations, leading to potential losses for the ETF.

Who Should Consider Investing

• Investors seeking high current income
• Investors with a short-term investment horizon
• Investors seeking exposure to the high-yield corporate bond market with a defined maturity date
• Investors comfortable with higher volatility

Fundamental Rating Based on AI

We assign a fundamental rating of 7.5 out of 10 to BHYC. This rating is based on the ETF's strong financial performance, experienced management team, competitive expense ratio, and unique maturity focus. However, investors should be aware of the risks associated with high-yield bonds, including volatility and credit risk. It is essential to carefully consider your investment objectives and risk tolerance before investing in BHYC.

Resources and Disclaimers

Resources:

• Invesco 2024 High Yield Corporate Bond ETF (BHYC)
• Invesco website https://www.invesco.com/us/individual/products/etfs/product-detail?audienceType=Investor&productId=ETF-BHYC
• Morningstar ETF report https://www.morningstar.com/etfs/arcx/bhyc/quote

Disclaimer: The information provided in this analysis is for informational purposes only and should not be considered investment advice. Investing in ETFs involves risk, and investors should carefully consider their investment objectives and risk tolerance before making any investment decisions.