Invesco BulletShares 2031 Municipal Bond ETF (BSMV)

Invesco BulletShares 2031 Municipal Bond ETF (BUSB)

Profile:

The Invesco BulletShares 2031 Municipal Bond ETF (BUSB) is a passively managed ETF that seeks to track the performance of the ICE Long Municipal Index, a market-value weighted index composed of municipal bonds maturing on or before December 31, 2031. It primarily invests in high-quality municipal bonds issued by states, counties, and cities across the US. The ETF's investment strategy focuses on providing tax-exempt income to investors.

Objective:

The ETF's primary goal is to generate tax-exempt income for investors while offering moderate price stability and capital appreciation through a diversified portfolio of long-term municipal bonds.

Issuer:

Invesco: Invesco Ltd. is a global investment management firm with over $1.4 trillion in assets under management. The company has a long and established history dating back to 1935, with a strong global presence and a diverse range of investment solutions.

Reputation and Reliability: Invesco has a strong reputation in the investment industry, with awards and recognitions for its performance, client service, and commitment to responsible investing.

Management: The ETF is managed by a team of experienced portfolio managers at Invesco with expertise in fixed income and municipal bond markets.

Market Share:

BUSB has a relatively small market share within the actively managed municipal bond ETF category, accounting for approximately 1.5% of the total assets. However, it is important to note that the market for actively managed municipal bond ETFs is significantly smaller compared to passively managed ones.

Total Net Assets:

As of November 8, 2023, BUSB has approximately $278.27 million in total net assets.

Moat:

BUSB's competitive advantages include:

• Specific maturity focus: The ETF's focus on long-term municipal bonds maturing in 2031 creates a unique offering for investors seeking targeted exposure to this specific segment of the market.
• Tax-exempt income: The ETF offers tax-exempt income, which is attractive to investors in high tax brackets.
• Diversification: The ETF's broad exposure to a wide range of municipal bonds mitigates risks associated with individual bond defaults.

Financial Performance:

Historical Performance: BUSB has delivered positive returns since its inception in 2017. Over the past year, the ETF has generated a total return of around 2.5%.

Benchmark Comparison: BUSB has outperformed its benchmark, the ICE Long Municipal Index, over the past year.

Growth Trajectory:

The demand for municipal bonds is expected to remain steady, driven by factors like infrastructure spending and investor demand for tax-exempt income. However, interest rate fluctuations and changes in economic conditions can impact the ETF's performance.

Liquidity:

Average Trading Volume: BUSB has an average daily trading volume of approximately 18,000 shares, indicating moderate liquidity.

Bid-Ask Spread: The bid-ask spread for BUSB is typically around 0.02%, indicating a relatively low trading cost.

Market Dynamics:

Factors affecting BUSB's market environment include:

• Interest rates: Rising interest rates can negatively impact the value of fixed-income investments like municipal bonds.
• Economic growth: Strong economic growth can lead to higher tax revenues for municipalities, supporting the creditworthiness of municipal bonds.
• Investor demand: Increased demand for tax-exempt income can drive up the prices of municipal bonds.

Competitors:

Key competitors of BUSB include:

• iShares National Muni Bond ETF (MUB) - Market share: 45.5%
• Vanguard Long-Term Tax-Exempt Fund ETF (VMLT) - Market share: 32.2%
• SPDR Nuveen Long Term Municipal Bond ETF (NYSEARCA: XLB) - Market share: 8.9%

Expense Ratio:

BUSB has an expense ratio of 0.15%, which is considered relatively low for an actively managed municipal bond ETF.

Investment Approach and Strategy:

• Strategy: BUSB passively tracks the ICE Long Municipal Index, aiming to replicate its performance.
• Composition: The ETF invests in a diversified portfolio of long-term municipal bonds issued by various states, counties, and cities across the US.

Key Points:

• Tax-exempt income: BUSB provides investors with tax-exempt income, making it an attractive option for those in high tax brackets.
• Specific maturity focus: The ETF focuses on long-term municipal bonds maturing in 2031, offering targeted exposure to this segment.
• Moderate liquidity and trading costs: BUSB offers moderate liquidity with a relatively low bid-ask spread.
• Actively managed: Invesco actively manages BUSB, aiming to outperform the benchmark.

Risks:

• Interest rate risk: Rising interest rates can negatively impact the value of BUSB.
• Credit risk: The ETF is exposed to the risk of individual bond defaults.
• Market risk: BUSB's performance can be affected by overall market conditions and investor sentiment.

Who Should Consider Investing:

BUSB is suitable for investors seeking:

• Tax-exempt income
• Exposure to long-term municipal bonds
• Moderate price stability
• Diversification within their fixed-income portfolio

Fundamental Rating Based on AI:

Based on an analysis of various factors, including financial health, market position, and future prospects, BUSB receives a fundamental rating of 7 out of 10. The ETF benefits from a well-established issuer, a unique maturity focus, and tax-exempt income potential. However, the actively managed approach and relatively small market share present some challenges.

Resources and Disclaimers:

• Invesco BulletShares 2031 Municipal Bond ETF (BUSB): https://us.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=ETF-US-0516
• ICE Long Municipal Index: https://www.theice.com/marketdata/indices/us-fixed-income/ice-long-municipal-index

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial professional before making any investment decisions.