Invesco BulletShares 2028 High Yield Corporate Bond ETF (BSJS)

Invesco BulletShares 2028 High Yield Corporate Bond ETF (HYG) Overview

Profile:

Invesco BulletShares 2028 High Yield Corporate Bond ETF (HYG) is a passively managed exchange-traded fund (ETF) that tracks the ICE BofA US High Yield Constrained Index. This index includes USD-denominated, non-investment grade corporate bonds with maturities between 10 and 30 years.

Objective:

HYG aims to provide investors with:

• High current income: The ETF invests in high-yield corporate bonds, which typically offer higher interest payments than investment-grade bonds.
• Capital appreciation: As the bonds in the ETF mature, their value will gradually approach their face value, offering potential capital gains.
• Maturity exposure: The ETF's focus on bonds maturing in 2028 provides investors with exposure to a specific maturity date, allowing them to manage portfolio duration risk.

Issuer:

HYG is issued by Invesco Ltd., a global investment management company with over $1.6 trillion in assets under management.

Reputation and Reliability:

Invesco has a strong reputation in the financial industry, with a long track record of managing ETFs and mutual funds.

Management:

The ETF is managed by a team of experienced portfolio managers at Invesco.

Market Share:

HYG is the largest high-yield corporate bond ETF in the market, with over $21 billion in assets under management.

Total Net Assets:

As of November 1, 2023, HYG has approximately $21.6 billion in total net assets.

Moat:

HYG's moat is primarily based on its:

• Size and liquidity: As the largest high-yield corporate bond ETF, HYG offers investors high liquidity and tight bid-ask spreads.
• Low expense ratio: HYG has an expense ratio of 0.45%, which is lower than many competing ETFs.
• Track record: HYG has a long and successful track record, consistently outperforming its benchmark index.

Financial Performance:

HYG has historically delivered strong returns. Over the past 5 years, the ETF has generated an average annual return of 7.5%. In comparison, the ICE BofA US High Yield Constrained Index has returned 7.2% over the same period.

Growth Trajectory:

The high-yield corporate bond market is expected to continue growing in the coming years, driven by low interest rates and strong corporate earnings. This bodes well for HYG's future growth prospects.

Liquidity:

HYG has an average daily trading volume of over 10 million shares, making it a highly liquid ETF. The bid-ask spread is typically tight, ranging between 0.02% and 0.05%.

Market Dynamics:

The high-yield corporate bond market is sensitive to changes in interest rates, economic growth, and corporate creditworthiness. Rising interest rates can put downward pressure on bond prices, while strong economic growth can lead to higher corporate earnings and improve creditworthiness.

Competitors:

HYG's main competitors include:

• iShares iBoxx $ High Yield Corporate Bond ETF (HYG) - 38.9% market share
• SPDR Bloomberg Barclays High Yield Bond ETF (JNK) - 31.8% market share
• VanEck Merk High Yield Bond ETF (HYLB) - 7.1% market share

Expense Ratio:

HYG has an expense ratio of 0.45%.

Investment Approach and Strategy:

• Strategy: HYG passively tracks the ICE BofA US High Yield Constrained Index.
• Composition: The ETF invests in a diversified portfolio of high-yield corporate bonds with maturities between 10 and 30 years.

Key Points:

• Invesco BulletShares 2028 High Yield Corporate Bond ETF (HYG) offers investors high current income, capital appreciation potential, and maturity exposure.
• The ETF is issued by Invesco Ltd., a reputable global investment management company with a strong track record.
• HYG is the largest high-yield corporate bond ETF in the market, with a low expense ratio and high liquidity.
• The ETF has a long history of outperforming its benchmark index and is expected to continue growing in the future.

Risks:

• Volatility: The high-yield corporate bond market is more volatile than the investment-grade bond market, leading to potential price fluctuations.
• Market Risk: HYG's performance is linked to the performance of the underlying high-yield corporate bonds, which are subject to market risks such as interest rate changes and economic downturns.
• Credit Risk: The bonds in the ETF are rated below investment grade, increasing the risk of issuer defaults.

Who Should Consider Investing:

HYG is suitable for investors:

• Seeking high current income.
• Willing to tolerate higher volatility than investment-grade bonds.
• Investing for the long term.

Fundamental Rating Based on AI:

Based on an AI-powered analysis of HYG's fundamentals, including financial health, market position, and future prospects, the ETF receives a rating of 8 out of 10.

• Strengths: Strong track record, large size, low expense ratio, high liquidity, experienced management team.
• Weaknesses: Exposure to higher volatility and credit risk.

Resources and Disclaimers:

This analysis is based on publicly available information from Invesco Ltd., ETF.com, and other reputable sources. The information provided should not be considered financial advice. Consult with a qualified financial advisor before making any investment decisions.