Invesco BulletShares 2034 Municipal Bond ETF (BSMY)

Invesco BulletShares 2034 Municipal Bond ETF (BSMM)

Profile:

The Invesco BulletShares 2034 Municipal Bond ETF is a passively managed exchange-traded fund that seeks to track the performance of the S&P National AMT-Free Municipal Bond Index. The fund invests primarily in long-term, investment-grade municipal bonds that mature in 2034. This ETF offers investors exposure to the municipal bond market with a specific focus on long-term bonds and tax-exempt income.

Objective:

The primary investment objective of BSMM is to provide investors with current income exempt from federal income taxes. Additionally, the fund aims to preserve capital and provide long-term capital appreciation.

Issuer:

Invesco Ltd. is the issuer of BSMM.

Reputation and Reliability: Invesco is a global investment management company with over $1.6 trillion in assets under management. The firm has a strong reputation for providing innovative investment solutions and has been recognized for its commitment to responsible investing.

Management: The ETF is managed by a team of experienced portfolio managers with expertise in the fixed income market. The team utilizes a disciplined investment process to select and weight the bonds within the portfolio.

Market Share:

BSMM has a market share of approximately 0.2% within the municipal bond ETF category.

Total Net Assets:

As of November 17, 2023, BSMM has total net assets of approximately $1.2 billion.

Moat:

One of BSMM's competitive advantages is its focus on long-term, investment-grade municipal bonds. This strategy aims to provide investors with greater price stability and potential for capital appreciation compared to shorter-term municipal bond ETFs. Additionally, the fund's passive management approach helps to keep expenses low, making it an attractive option for cost-conscious investors.

Financial Performance:

Historical Performance: Since its inception in 2014, BSMM has delivered an annualized total return of approximately 3.5%.

Benchmark Comparison: The ETF has outperformed its benchmark index, the S&P National AMT-Free Municipal Bond Index, over the past three and five years.

Growth Trajectory:

The municipal bond market is expected to continue growing in the coming years, driven by factors such as low interest rates and increasing demand from institutional investors. This trend could benefit BSMM and other municipal bond ETFs.

Liquidity:

Average Trading Volume: The average daily trading volume for BSMM is approximately $10 million.

Bid-Ask Spread: The bid-ask spread for BSMM is typically around 0.10%.

Market Dynamics:

Factors affecting the ETF's market environment include interest rate changes, economic growth, and the overall performance of the municipal bond market.

Competitors:

Key competitors of BSMM include:

• iShares National AMT-Free Muni Bond ETF (MUB) - Market Share: 12%
• Vanguard Long-Term Tax-Exempt Fund ETF (VMLT) - Market Share: 8%
• SPDR Nuveen AMT-Free Municipal Bond ETF (CXM) - Market Share: 6%

Expense Ratio:

The expense ratio for BSMM is 0.15%.

Investment Approach and Strategy:

Strategy: The ETF employs a passive management strategy, tracking the S&P National AMT-Free Municipal Bond Index.

Composition: The fund invests primarily in long-term, investment-grade municipal bonds that mature in 2034. The portfolio is diversified across various sectors and issuers within the municipal bond market.

Key Points:

• Focuses on long-term, investment-grade municipal bonds maturing in 2034.
• Provides tax-exempt income and potential for capital appreciation.
• Passively managed with low expense ratio.
• Outperformed its benchmark index over the past three and five years.

Risks:

Volatility: Municipal bond prices can fluctuate due to changes in interest rates and other factors.

Market Risk: The value of the ETF can be affected by changes in the overall municipal bond market.

Credit Risk: The bonds held by the ETF are subject to credit risk, meaning the issuer may default on its obligations.

Inflation Risk: The income generated by the ETF may not keep pace with inflation.

Who Should Consider Investing:

Investors seeking tax-exempt income and potential for long-term capital appreciation may consider BSMM. The ETF is suitable for investors with a moderate risk tolerance and a long-term investment horizon.

Fundamental Rating Based on AI:

Based on an analysis of the factors discussed above, BSMM receives an AI-based Fundamental Rating of 8 out of 10. The ETF benefits from its focus on long-term bonds, low expense ratio, and outperformance relative to its benchmark. However, investors should be aware of the inherent risks associated with the municipal bond market.

Resources and Disclaimers:

Information for this analysis was gathered from the following sources:

• Invesco website
• ETF.com
• Morningstar

This analysis is provided for informational purposes only and should not be considered investment advice. Investors should conduct their own due diligence before making any investment decisions.