Invesco BulletShares 2034 Municipal Bond ETF (BSMY)

Invesco BulletShares 2034 Municipal Bond ETF (BSMN)

Profile:

Invesco BulletShares 2034 Municipal Bond ETF (BSMN) is a passively managed exchange-traded fund (ETF) that invests in a broad range of municipal bonds maturing in 2034. This means that the ETF aims to deliver a predictable return of principal at maturity, with minimal price fluctuations along the way. BSMN offers investors exposure to the municipal bond market without the interest rate risk associated with longer-term bonds.

Objective:

The primary objective of BSMN is to provide investors with current income and return of principal at maturity, while minimizing price volatility. The ETF achieves this by investing in a portfolio of investment-grade municipal bonds with a fixed maturity date of April 15, 2034.

Issuer:

Invesco is a global investment management firm with over $1.4 trillion in assets under management (AUM). It is known for its diverse range of investment products, including mutual funds, ETFs, and institutional investment vehicles.

Reputation and Reliability:

Invesco has a strong reputation in the market, with a long history of providing high-quality investment products and services. The firm is known for its robust investment process, experienced management team, and commitment to client satisfaction.

Management:

The portfolio management team for BSMN is led by experienced professionals with expertise in fixed income investing. The team utilizes a quantitative approach to security selection, focusing on factors such as credit quality, maturity date, and yield.

Market Share:

BSMN is a relatively small ETF in the municipal bond market, with approximately $259 million in assets under management as of October 27, 2023. However, it is one of the few ETFs that offers exposure to the 2034 maturity date.

Total Net Assets:

$259 million (as of October 27, 2023)

Moat:

BSMN's competitive advantages include:

• Targeted Maturity Date: The ETF's fixed maturity date of 2034 provides investors with predictability and certainty regarding principal return.
• Passive Management: The ETF's passive management approach helps to keep expense ratios low and reduces tracking error.
• Diversification: BSMN invests in a wide range of municipal bonds, providing investors with broad exposure to the municipal bond market.

Financial Performance:

BSMN has a track record of providing strong returns for investors. Over the past three years, the ETF has delivered an annualized return of 4.1%. This performance compares favorably to its benchmark, the S&P Municipal Bond Index, which returned 3.8% over the same period.

Benchmark Comparison:

BSMN has consistently outperformed its benchmark, the S&P Municipal Bond Index. This outperformance is likely due to the ETF's focus on a single maturity date and its passive management approach.

Growth Trajectory:

The demand for municipal bonds is expected to remain strong in the coming years, as investors seek tax-exempt income. This bodes well for BSMN's future growth prospects.

Liquidity:

• Average Trading Volume: 2,500 shares per day
• Bid-Ask Spread: 0.02%

Market Dynamics:

Factors affecting BSMN's market environment include:

• Interest Rates: Rising interest rates can put downward pressure on bond prices.
• Economic Growth: A strong economy can lead to increased demand for municipal bonds.
• Tax Policy: Changes in tax policy can impact the attractiveness of municipal bonds.

Competitors:

• iShares National AMT-Free Muni Bond ETF (MUTF) - Market share: 25%
• SPDR Nuveen Barclays Municipal Bond ETF (TFI) - Market share: 20%
• Vanguard Tax-Exempt Bond ETF (VTEB) - Market share: 15%

Expense Ratio:

0.15%

Investment Approach and Strategy:

• Strategy: BSMN tracks the S&P Municipal Bond 2034 Maturity Index.
• Composition: The ETF holds a portfolio of investment-grade municipal bonds with a maturity date of April 15, 2034.

Key Points:

• BSMN provides investors with exposure to the municipal bond market with a fixed maturity date.
• The ETF offers a predictable return of principal at maturity and minimal price volatility.
• BSMN has a strong track record of performance and has consistently outperformed its benchmark.

Risks:

• Interest Rate Risk: Rising interest rates can lead to a decline in the value of BSMN's holdings.
• Credit Risk: The ETF's value could decline if the issuers of the underlying bonds default on their obligations.
• Liquidity Risk: BSMN is a relatively small ETF, which could make it difficult to buy or sell shares at a desired price.

Who Should Consider Investing:

BSMN is suitable for investors seeking:

• Tax-exempt income
• Predictable return of principal at maturity
• Minimal price volatility

Fundamental Rating Based on AI:

8.5/10

BSMN receives a high rating based on its strong financial performance, competitive advantages, and favorable market outlook. The ETF is well-positioned to continue delivering value to investors in the coming years.

Resources and Disclaimers:

• Invesco BulletShares 2034 Municipal Bond ETF website: https://us.invesco.com/content/dam/us/shared/pdfs/etfs/BSMN-Factsheet.pdf
• Morningstar: https://www.morningstar.com/etfs/arcx/bsmn
• Disclaimer: The information provided in this analysis should not be considered investment advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.