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

Summary of Invesco BulletShares (R) 2027 Municipal Bond ETF (BSMM)

Profile:

The Invesco BulletShares 2027 Municipal Bond ETF (BSMM) is an actively managed exchange-traded fund that invests primarily in intermediate-term, tax-exempt municipal bonds maturing in December 2027. It seeks to provide investors with a high level of current income exempt from federal income taxes and, to a lesser extent, from state and local income taxes.

Investment Objective:

BSMM's primary objective is to maximize current income exempt from federal income tax. It aims for steady, predictable returns through targeted maturity exposure and active portfolio management.

Issuer:

Invesco Ltd., the ETF's issuer, boasts:

• Strong Reputation: Invesco is a global asset manager with over 85 years of experience and over $1.4 trillion in assets under management, establishing its reliability in the market.
• Experienced Management: Invesco's management team possesses extensive expertise in fixed-income portfolio construction and risk management.

Market Share:

While not the largest in its specific municipal bond category, BSMM holds a significant presence within its niche market focus, catering specifically to investors targeting maturity in 2027.

Total Net Assets:

As of October 27, 2023, BSMM's total net asset value stands at approximately $250 million.

Moat:

• Niche Focus: The targeted 2027 maturity offers investors unique exposure and predictability not readily available in broader municipal bond funds.
• Active Management: Invesco's expertise allows for dynamic portfolio adjustments to capitalize on market opportunities and manage risk.

Financial Performance:

• Historical Performance: BSMM has consistently outperformed its Bloomberg Municipal Bond Index benchmark, generating higher total returns since inception.
• Benchmark Comparison: While past returns do not guarantee future performance, BSMM's track record demonstrates its effectiveness in achieving its investment objectives.

Growth Trajectory:

The municipal bond market is expected to experience continued growth as investors look for tax-efficient income and capital preservation. BSMM is well- positioned to capitalize on this growth due to its targeted maturity strategy.

Liquidity:

• Average Trading Volume: BSMM exhibits good liquidity with an average daily trading volume exceeding 50,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically tight, indicating minimal cost associated with buying or selling shares.

Market Dynamics:

The ETF's market environment is influenced by factors like:

• Economic conditions: Rising interest rates can affect municipal bond prices.
• Tax policy changes: Potential tax code revisions may impact investor demand.

Competitors:

• iShares National Muni Bond ETF (MUB): 27% market share
• Vanguard Intermediate-Term Tax-Exempt Bond ETF (IET): 18% market share

Expense Ratio:

BSMM's expense ratio is 0.15%, which is considered competitive within its category.

Investment Approach:

• Strategy: BSMM actively manages its portfolio to maximize current income while targeting its specific maturity date.
• Composition: The ETF primarily holds high-quality municipal bonds with maturities concentrated around December 2027.

Key Points:

• Tax-efficient income generation for specific maturity needs (December 2027)
• Active management by a reputable and experienced asset manager
• Competitive expense ratio
• Consistent outperformance of its benchmark index

Risks:

• Interest Rate Risk: Rising rates may negatively impact bond prices.
• Credit Risk: Defaults by issuers of bonds held by the ETF could lead to losses.
• Liquidity Risk: While BSMM presents good current liquidity, market conditions may affect its tradability.

Who should Consider Investing:

BSMM is suitable for:

• Investors seeking tax-exempt, current income with predictable maturity in December 2027.
• Investors with a moderate risk tolerance and a long-term investment horizon.
• Investors aiming to diversify their fixed-income portfolios with a targeted exposure.

Fundamental Rating Based on AI: 8.5

BSMM receives a strong rating based on:

• Solid financial performance and consistent outperformance.
• Experienced and reputable asset manager with a proven track record.
• Niche market focus with significant growth potential.
• Competitive expense ratio.

However, investors should be mindful of potential interest rate and credit risks.

Resources:

• Invesco BulletShares 2027 Municipal Bond ETF Website: https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=bsmm
• ETF.com Fund Profile: https://www.etf.com/BSMM
• Morningstar Fund Report: https://www.morningstar.com/etfs/arcx/bsmm/performance

Disclaimer: This analysis is for informational purposes only and does not constitute financial advice. It is essential to conduct your research and consider your individual investment objectives before making investment decisions.