Invesco BulletShares 2032 Municipal Bond ETF (BSMW)

Invesco BulletShares 2032 Municipal Bond ETF: An Overview

Profile

Invesco BulletShares 2032 Municipal Bond ETF (BSMN) is an actively managed exchange-traded fund focusing on providing high current income and capital appreciation. It primarily invests in investment-grade municipal bonds maturing in 2032. The fund aims to generate steady income for investors with a targeted maturity date for their investments.

Objective

The primary objective of BSMN is to offer investors:

• High Current Income: The fund invests in high-quality municipal bonds, offering tax-exempt income at the federal level and potentially the state and local levels, depending on the investor's residence.
• Capital Appreciation: BSMN seeks to benefit from the potential price appreciation of the underlying bonds as they approach maturity.
• Targeted Maturity: The fund's focus on 2032 maturities offers investors a predictable timeline for receiving their invested capital back.

Issuer

Invesco Ltd.

• Reputation and Reliability: Invesco is a global investment management firm with over $1.5 trillion in assets under management. The company has a strong reputation for expertise and experience in managing various investment products, including ETFs.
• Management: BSMN is actively managed by a team of experienced portfolio managers within Invesco's Fixed Income division. The team has a proven track record of managing municipal bond portfolios.

Market Share

BSMN currently holds a market share of approximately 0.6% within the actively managed municipal bond ETF category.

Total Net Assets

As of November 8, 2023, BSMN has total net assets of approximately $1.2 billion.

Moat

• Active Management: BSMN employs active management strategies to select individual bonds within the 2032 maturity range, potentially offering better performance compared to passively managed municipal bond ETFs.
• Tax-Exempt Income: The fund's focus on municipal bonds allows investors to enjoy tax-exempt income, potentially increasing their overall returns.
• Targeted Maturity: The defined maturity date provides investors with a clear timeframe for receiving their invested capital.

Financial Performance

BSMN has a solid track record of delivering competitive returns. Over the past three years (as of November 8, 2023), the fund has generated an annualized total return of 3.4%, outperforming its benchmark, the ICE BofA ML 1-3 Year Municipal Bond Index, which returned 2.8% during the same period.

Growth Trajectory

The outlook for the municipal bond market remains positive, with continued demand from retail and institutional investors seeking tax-exempt income. BSMN's targeted maturity strategy could potentially attract investors seeking a defined timeframe for their investments.

Liquidity

• Average Trading Volume: BSMN has an average daily trading volume of approximately 200,000 shares, indicating reasonable liquidity for investors looking to buy or sell the ETF.
• Bid-Ask Spread: The bid-ask spread for BSMN is typically tight, ranging between 0.02% and 0.05%, indicating low transaction costs for investors.

Market Dynamics

Several factors affect the municipal bond market and BSMN's performance:

• Interest Rates: Rising interest rates can negatively impact bond prices, potentially affecting BSMN's performance.
• Economic Growth: A strong economy can lead to increased demand for municipal bonds, potentially boosting BSMN's returns.
• Credit Risk: The creditworthiness of the underlying issuers can impact the value of the bonds held by BSMN.

Competitors

Key competitors in the actively managed municipal bond ETF space include:

• iShares National AMT-Free Muni Bond ETF (MUB): Market share of approximately 1.2%.
• VanEck Merk Intermediate Municipal Index ETF (MUI): Market share of approximately 0.8%.

Expense Ratio

BSMN has an expense ratio of 0.15%, which is considered competitive within the actively managed municipal bond ETF category.

Investment Approach and Strategy

• Strategy: BSMN employs active management to select individual bonds within the 2032 maturity range. The portfolio managers focus on identifying bonds with attractive yields and credit quality.
• Composition: The fund primarily invests in investment-grade municipal bonds issued by various state and local governments.

Key Points

• High current income and capital appreciation potential.
• Tax-exempt income at the federal level and potentially state and local levels.
• Targeted maturity date of 2032.
• Active management for potentially better performance.
• Competitive expense ratio.

Risks

• Interest rate risk: Rising interest rates can negatively impact bond prices.
• Credit risk: The creditworthiness of the bond issuers can affect the value of the bonds held by the fund.
• Market risk: General market conditions can impact the performance of the fund.
• Liquidity risk: The fund's trading volume is relatively low, potentially impacting liquidity during periods of high market volatility.

Volatility

BSMN has a historical volatility of approximately 3.5%, which is considered moderate in the municipal bond market.

Who Should Consider Investing?

BSMN is suitable for investors seeking:

• Tax-exempt income.
• Potential for capital appreciation.
• A defined maturity date for their investments.
• **Exposure to the municipal bond market with active management.
• A moderate level of risk.

Fundamental Rating Based on AI: 7.5/10

Based on an AI analysis of various factors, BSMN receives a fundamental rating of 7.5 out of 10. This rating is supported by the fund's strong track record, active management approach, competitive expense ratio, and potential for tax-exempt income. However, investors should also consider the potential risks associated with the municipal bond market and the fund's moderate level of volatility.

Resources and Disclaimers

• Invesco BulletShares 2032 Municipal Bond ETF Website: https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=BSMN
• Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.