Invesco BulletShares (R) 2027 Municipal Bond ETF (BSMR)

Invesco BulletShares 2027 Municipal Bond ETF (BSM)

Profile:

Invesco BulletShares 2027 Municipal Bond ETF seeks to provide current income exempt from federal income tax. It invests in investment-grade municipal bonds maturing on or before December 31, 2027. The ETF aims to offer exposure to a diversified portfolio of municipal bonds with maturities concentrated around 2027.

Objective:

The primary objective of BSM is to generate current income exempt from federal income tax, while minimizing price volatility through its focus on a specific maturity date.

Issuer:

• Invesco Ltd.: Invesco is a global investment management firm with over $1.6 trillion in assets under management. Known for its diverse range of products and strong reputation in the industry.
• Management: Experienced team with expertise in fixed income investing and portfolio management.

Market Share:

BSM has a market share of approximately 0.3% within the municipal bond ETF category.

Total Net Assets:

As of November 3, 2023, BSM's total net assets were $272.6 million.

Moat:

• Maturity Focus: The concentrated maturity strategy offers predictability in terms of cash flow and reduces interest rate risk.
• Investment Grade Focus: BSM invests in high-quality bonds, minimizing credit risk.

Financial Performance:

• 12-month trailing total return: 3.22% (as of November 3, 2023)
• Outperformed its benchmark, the S&P National AMT-Free Municipal Bond Index, over the past year.

Growth Trajectory:

The ETF's assets under management have been steadily increasing, indicating growing investor interest in this type of investment.

Liquidity:

• Average Daily Trading Volume: 35,000 shares (as of October 31, 2023)
• Bid-Ask Spread: 0.02% (as of October 31, 2023)

Market Dynamics:

• Interest rate changes significantly impact bond prices. Rising rates can lead to price decline.
• Economic conditions can influence the creditworthiness of issuers, affecting bond values.

Competitors:

• iShares National AMT-Free Muni Bond ETF (MUB) - market share: 30.7%
• Vanguard Tax-Exempt Bond ETF (VGIT) - market share: 21.3%

Expense Ratio:

The expense ratio of BSM is 0.15%.

Investment Approach and Strategy:

• Strategy: BSM tracks a passively managed index, the ICE BofAML 2027 AMT-Free Municipal Securities Index.
• Composition: Primarily invests in investment-grade municipal bonds maturing on or before December 31, 2027.

Key Points:

• Tax-exempt income potential.
• Reduced price volatility through maturity focus.
• Invests in high-quality municipal bonds.

Risks:

• Interest rate risk: Bond prices can decline when interest rates rise.
• Market risk: Bond prices can fall due to changes in market conditions or the creditworthiness of issuers.
• Call risk: Bonds can be redeemed by the issuer before maturity, potentially reducing potential returns.
• Liquidity risk: The ETF may trade at a premium or discount to its net asset value, impacting the price received upon selling shares.

Who Should Consider Investing:

• Investors seeking current income exempt from federal income tax.
• Investors with a moderate risk tolerance.
• Investors looking for exposure to a diversified portfolio of municipal bonds with a specific maturity date.

Fundamental Rating Based on AI: 7.5/10

BSM demonstrates strong fundamentals with a diversified portfolio of investment-grade municipal bonds, a concentrated maturity strategy mitigating interest rate risk, and a competitive expense ratio. However, its limited market share and relatively small total net assets compared to larger competitors might limit potential growth opportunities.

Resources and Disclaimer:

This analysis is based on data and information available as of November 3, 2023, and may not be fully up-to-date. This is not financial advice, and investors should conduct their own research before making investment decisions.

Sources: Invesco, ETFdb.com, Morningstar, Bloomberg

Disclaimer: The information presented here is for informational purposes only and should not be considered financial advice. It is essential to consult with a qualified financial professional before making any investment decisions.