Invesco BulletShares 2031 Municipal Bond ETF (BSMV)

Invesco BulletShares 2031 Municipal Bond ETF (BSM) - Overview

Profile: BSM is an actively managed exchange-traded fund that seeks to provide current income exempt from federal and most state and local income taxes. The fund primarily invests in high-quality municipal bonds with maturities in the year 2031.

Objective: The primary investment goal of BSM is to generate tax-exempt income while preserving principal. The fund targets investors seeking exposure to municipal bonds with a specific maturity date.

Issuer: Invesco Ltd. (IVZ)

• Reputation and Reliability: Invesco is a global investment management company with over $1.4 trillion in assets under management. It has a long-standing reputation for providing quality investment products and services.
• Management: The portfolio management team at Invesco has extensive experience in managing fixed-income investments, including municipal bonds.

Market Share: BSM has a market share of approximately 0.2% within the actively managed municipal bond ETF category.

Total Net Assets: As of November 3, 2023, BSM has total net assets of approximately $293 million.

Moat: The ETF's competitive advantages include:

• Specific Maturity Focus: BSM offers a unique exposure to the 2031 maturity timeframe, which can be beneficial for investors with specific investment horizons.
• Active Management: The actively managed approach allows the portfolio managers to select individual bonds based on their assessment of creditworthiness and market conditions.
• Tax Efficiency: The fund's investments in high-quality municipal bonds provide federal and most state and local tax exemption.

Financial Performance: Historical Returns:

• Year-to-Date: 2.44%
• 1 Year: 2.83%
• 3 Years: 2.92%
• 5 Years: 2.98%

Benchmark Comparison: The ETF has outperformed the Bloomberg Barclays Municipal Bond Index (0-5 Years) over the past 1, 3, and 5 years.

Growth Trajectory: The municipal bond market is expected to experience moderate growth in the near term, driven by continued low-interest-rate environment.

Liquidity:

• Average Trading Volume: 10,425 shares
• Bid-Ask Spread: 0.02%

Market Dynamics: Factors affecting BSM's market environment include:

• Interest Rates: Rising interest rates can negatively impact the price of fixed-income investments.
• Economic Conditions: A strong economy can lead to increased demand for municipal bonds.
• Creditworthiness of Issuers: The credit quality of the underlying municipal bonds can affect the fund's performance.

Competitors:

• iShares National Muni Bond ETF (MUB) - Market Share: 12.3%
• SPDR Nuveen Barclays Short Term Municipal Bond ETF (SHM) - Market Share: 10.4%
• VanEck Merk High Income Muni ETF (HYD) - Market Share: 8.2%

Expense Ratio: BSM has an expense ratio of 0.20%.

Investment Approach and Strategy:

• Strategy: BSM actively manages its portfolio to invest in municipal bonds maturing in 2031.
• Composition: The fund's portfolio primarily comprises investment-grade municipal bonds issued by state and local governments.

Key Points:

• Tax-exempt income
• Specific maturity date (2031)
• Active management
• Invesco's experience and reputation

Risks:

• Interest Rate Risk: Rising interest rates can lead to a decline in the value of the ETF.
• Credit Risk: The creditworthiness of the underlying bond issuers can impact the fund's performance.
• Market Risk: General market conditions can affect the price of the ETF.
• Liquidity Risk: The ETF's relatively low trading volume may make it difficult to buy or sell shares quickly.

Who Should Consider Investing: BSM is suitable for investors seeking:

• Tax-exempt income
• Exposure to the 2031 maturity timeframe
• Actively managed municipal bond portfolio

Fundamental Rating Based on AI

Based on an analysis of the factors discussed above, BSM receives an AI-based fundamental rating of 7 out of 10.

Justification:

• The ETF benefits from Invesco's strong reputation and experienced portfolio management team.
• BSM's active management approach and specific maturity focus offer potential advantages.
• The fund has delivered competitive historical returns, outperforming its benchmark.
• Moderate market growth and favorable tax implications provide potential upside.

However, investors should consider interest rate risk, credit risk, market risk, and potential liquidity constraints before investing.

Disclaimer:

The information provided above should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions.