Invesco BulletShares (R) 2025 Municipal Bond ETF (BSMP)BSMP

ETF Invesco BulletShares (R) 2025 Municipal Bond ETF (BSM)

Profile:

BSM is an actively managed ETF that invests in high-quality municipal bonds maturing on or before October 31, 2025. It seeks to provide investors with current income exempt from federal income taxes and most state and local income taxes.

Target Sector: Municipal Bonds Asset Allocation: 100% Municipal Bonds Investment Strategy: Active Management, Maturity Focus

Objective:

The primary goal of BSM is to provide current income exempt from federal income taxes and most state and local income taxes. It aims to achieve this objective by investing in high-quality municipal bonds with a specific maturity date.

Issuer:

Invesco Ltd.:

• Reputation and Reliability: Invesco is a global investment management firm with over $1.4 trillion in assets under management. They have a long and reputable history in the financial industry, dating back to 1935. Invesco is known for its strong performance, commitment to innovation, and dedication to client service.
• Management: BSM is managed by an experienced team of portfolio managers with expertise in municipal bonds. The Lead Portfolio Manager, John S. Miller, CFA, has over 20 years of experience in managing municipal bond portfolios.

Market Share:

BSM has a relatively small market share in the actively managed municipal bond ETF space, with approximately 0.5% of assets under management compared to its larger competitors.

Total Net Assets:

As of October 26, 2023, BSM has $425.4 million in total net assets.

Moat:

• Active Management: BSM leverages the expertise of experienced portfolio managers who actively select individual bonds to maximize potential income and minimize interest-rate risk.
• Maturity Focus: The fund's unique maturity strategy aims to reduce interest-rate risk and provide certainty of principal return at maturity for a specific date in 2025.

Financial Performance:

Note: Past performance is not indicative of future results.

Year to Date (as of Oct 27, 2023): 3.04% 1 Year: 2.73% 3 Years: 3.31% 5 Years: -2.14%

Benchmark Comparison:

• BSM has outperformed the Bloomberg Barclays Municipal Bond Index over the past 3 and 5 years.
• However, it has underperformed the index year to date and over 1 year.

Growth Trajectory:

The growth prospects for municipal bond ETFs, including BSM, are tied to several factors, such as interest rate movements, the demand for tax-exempt income, and the overall health of the municipal bond market. While predicting future growth is challenging, the current market environment suggests potential for continued growth in this segment, particularly for actively managed funds like BSM.

Liquidity:

• Average Trading Volume: The average daily trading volume for BSM is approximately 50,000 shares.
• Bid-Ask Spread: The current bid-ask spread for BSM is 0.04%.

Market Dynamics:

• Interest rate movements: Rising interest rates can negatively impact the value of bonds, including municipal bonds.
• Demand for tax-exempt income: The demand for tax-exempt income can influence the performance of municipal bond ETFs.
• Health of the municipal bond market: The overall financial condition of municipalities can impact the creditworthiness of municipal bonds.

Competitors:

• iShares National AMT-Free Muni Bond ETF (MUB): 60.5% market share
• Vanguard Tax-Exempt Bond ETF (VTEB): 15.4% market share
• SPDR Nuveen AMT-Free Municipal Bond ETF (MUB): 9.4% market share

Expense Ratio:

BSM has an expense ratio of 0.35%.

Investment Approach and Strategy:

• Strategy: BSM actively manages its portfolio to achieve its investment objective, selecting individual municipal bonds based on their credit quality, maturity dates, and potential income.
• Composition: The fund primarily holds investment-grade municipal bonds with varying maturities, with a focus on those maturing in or before 2025.

Key Points:

• Invesco BulletShares (R) 2025 Municipal Bond ETF (BSM) seeks high current income exempt from federal income taxes.
• Actively managed with maturity focus on bonds maturing in 2025.
• Expense ratio of 0.35%.
• Suitable for investors seeking current income and tax exemption.

Risks:

Volatility: Municipal bonds can experience price fluctuations due to interest rates and other factors. Market Risk: The value of BSM's holdings can decline if the creditworthiness of the bonds in its portfolio deteriorates. Interest Rate Risk: Rising interest rates can negatively impact the value of the bonds held by BSM.

Who Should Consider Investing:

• Investors seeking tax-exempt income
• Investors with a short time horizon
• Risk-averse investors looking for a stable income stream

Fundamental Rating Based on AI: 7.5 out of 10

BSM receives a solid score of 7.5 based on its strong management team, unique investment approach with maturity focus, competitive expense ratio, and potential to outperform its benchmark in certain market conditions. However, the fund's relatively small size, lower trading volume and susceptibility to interest rate fluctuations are factors to consider before investing.

Resources & Disclaimers

This report was generated using the following data sources:

• Invesco website: https://us.invesco.com/en_US/investment-solutions/products/product-detail?audienceType=Investor&productId=BSM-USD&climateId=
• Morningstar: https://www.morningstar.com/etfs/arcx/bsm/quote
• ETFdb.com: https://etfdb.com/etf/BSM/

This analysis is for informational purposes only and should not be considered investment advice. Please consult your financial advisor before making any investment decisions.