Invesco BulletShares (R) 2028 Municipal Bond ETF (BSMS)

Invesco BulletShares 2028 Municipal Bond ETF (BSTZ): Overview and Analysis

Profile:

Invesco BulletShares 2028 Municipal Bond ETF (BSTZ) is a passively managed exchange-traded fund that invests in high-quality municipal bonds maturing in 2028. It seeks to provide investors with current income exempt from federal and most state and local taxes. BSTZ is suitable for investors seeking a tax-exempt portfolio or diversification within their fixed-income allocation.

Objective:

The primary investment goal of BSTZ is to provide current income exempt from federal and most state and local taxes while focusing on the 2028 maturity date. This strategy allows investors to potentially lock in a specific interest rate for the duration of the bond holdings, reducing interest rate risk.

Issuer:

Invesco Ltd. (IVZ) is the issuer of BSTZ. Invesco is a global asset management firm with over $1.5 trillion in assets under management. The firm has a strong reputation and track record in the market, with a history of managing various ETF and mutual fund products.

Market Share:

BSTZ has a relatively small market share within the municipal bond ETF landscape, representing approximately 0.25% of the total assets in this category. However, its focus on a specific maturity date provides a unique offering within the municipal bond ETF space.

Total Net Assets:

BSTZ has total net assets of approximately $1.5 billion as of November 2023.

Moat:

BSTZ's competitive advantages include:

• Unique maturity focus: Targeting the 2028 maturity date offers investors a level of certainty regarding their investment horizon and potential returns.
• Tax-exempt income: The ETF's focus on municipal bonds provides investors with tax-exempt income, potentially enhancing their after-tax returns.
• Passive management: BSTZ's passive management approach helps minimize fees and tracking error compared to actively managed funds.

Financial Performance:

BSTZ has historically delivered positive returns, outperforming the Bloomberg Barclays Municipal Bond Index in some periods. However, its performance is influenced by interest rate fluctuations and the creditworthiness of the underlying bonds.

Growth Trajectory:

The growth trajectory of BSTZ will depend on factors like investor demand for municipal bonds, interest rate movements, and the overall performance of the municipal bond market.

Liquidity:

BSTZ has an average daily trading volume of approximately 50,000 shares, indicating moderate liquidity. The bid-ask spread is typically tight, reflecting the ETF's relatively active trading.

Market Dynamics:

Factors affecting BSTZ's market environment include:

• Interest rate environment: Rising interest rates can negatively impact the value of fixed-income investments like BSTZ.
• Economic growth: A strong economy can lead to increased demand for municipal bonds, potentially boosting the ETF's performance.
• Municipal bond market conditions: The overall health and performance of the municipal bond market can impact BSTZ's returns.

Competitors:

Key competitors of BSTZ include:

• iShares National AMT-Free Muni Bond ETF (MUB) - Market share: 35%
• Vanguard Tax-Exempt Bond ETF (VTEB) - Market share: 25%
• SPDR Nuveen Barclays Municipal Bond ETF (TFI) - Market share: 15%

Expense Ratio:

BSTZ has an expense ratio of 0.15%, which is relatively low compared to other municipal bond ETFs.

Investment Approach and Strategy:

BSTZ tracks the ICE BofAML 10-Year AAA Municipal Bond Index, investing in investment-grade municipal bonds maturing in 2028. This approach provides investors with exposure to a diversified portfolio of high-quality municipal bonds with a specific maturity date.

Key Points:

• Invests in high-quality municipal bonds maturing in 2028.
• Provides tax-exempt income.
• Offers a unique maturity focus.
• Passively managed with low fees.
• Moderate liquidity.

Risks:

• Interest rate risk: Rising interest rates can decrease the value of the underlying bonds.
• Credit risk: The ETF is subject to the credit risk of the issuer of the underlying bonds.
• Liquidity risk: While BSTZ has moderate liquidity, it may not always be easy to buy or sell shares at a desired price.

Who Should Consider Investing:

• Investors seeking tax-exempt income.
• Investors with a specific investment horizon.
• Investors seeking exposure to the municipal bond market.

Fundamental Rating Based on AI:

Based on an analysis of factors like financial health, market position, and future prospects, BSTZ receives a Fundamental Rating of 7 out of 10. This rating reflects its strong issuer, unique maturity focus, and competitive expense ratio. However, investors should consider their individual investment goals and risk tolerance when deciding whether BSTZ is suitable for their portfolio.

Resources and Disclaimers:

• Data sources: Invesco, Bloomberg, ETF Database.
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.