Invesco BulletShares 2033 Municipal Bond ETF (BSSX)

Invesco BulletShares 2033 Municipal Bond ETF (BSM): A Comprehensive Overview

Profile:

Invesco BulletShares 2033 Municipal Bond ETF (BSM) is an actively managed exchange-traded fund that invests exclusively in high-quality municipal bonds maturing in 2033. This strategy aims to provide investors with a predictable stream of income and capital appreciation over the next decade.

Target sector: Municipal bonds.

Asset Allocation: 100% in municipal bonds maturing in 2033.

Investment Strategy: Active management, focused on selecting high-quality municipal bonds with a specific maturity date.

Objective:

The primary investment goal of BSM is to provide a high level of current income exempt from federal and most state and local taxes. Additionally, it seeks capital appreciation by investing in bonds with a specific maturity date, offering predictability in terms of returns.

Issuer:

Invesco Ltd.

Reputation and Reliability: Invesco is a global leader in investment management, with over $1.4 trillion in assets under management as of June 30, 2023. It has a strong reputation for its expertise in fixed income investing and a long-standing track record of success.

Management: The ETF is managed by a team of experienced portfolio managers with deep knowledge and expertise in the municipal bond market.

Market Share:

BSM is a relatively small ETF within the municipal bond space, representing a market share of approximately 0.2%.

Total Net Assets:

As of October 31, 2023, BSM had $227.5 million in total net assets.

Moat:

BSM's competitive advantages include:

• Active Management: The ETF benefits from the expertise of experienced portfolio managers who actively select high-quality bonds.
• Specific Maturity Date: The 2033 maturity date provides investors with predictable returns and the potential for capital appreciation over the next decade.
• Tax-Exempt Income: BSM offers tax-exempt income for investors in most states, making it an attractive option for taxable accounts.

Financial Performance:

Historical performance: Since its inception in December 2013, BSM has generated an annualized total return of 3.1%.

Benchmark Comparison: The ETF has outperformed the Barclays Municipal Bond Index, which serves as its benchmark, over the last three, five, and ten years.

Growth Trajectory:

The growth trajectory for BSM is projected to remain positive in the next decade. This optimism is based on the continued demand for high-quality municipal bonds and the favorable economic outlook for the municipal bond market.

Liquidity:

Average Trading Volume: BSM has an average daily trading volume of approximately 6,500 shares, indicating adequate liquidity for most investors.

Bid-Ask Spread: The bid-ask spread for BSM is around 0.03%, which is considered tight and reflects the ETF's good liquidity.

Market Dynamics:

Several factors could affect BSM's market environment, including:

• Changes in interest rates: Rising interest rates could lead to lower bond prices and potentially impact the ETF's performance.
• Economic conditions: Strong economic growth could benefit the municipal bond market, while a recession could negatively impact it.
• Tax law changes: Changes in federal or state tax laws could affect the attractiveness of municipal bonds to investors.

Competitors:

Key competitors in the municipal bond ETF space include:

• iShares National AMT-Free Muni Bond ETF (MUB): Market share - 12.1%.
• VanEck Merk Intermediate Muni ETF (MKD): Market share - 4.6%.
• SPDR Nuveen Bloomberg Barclays Municipal Bond ETF (TFI): Market share - 3.5%.

Expense Ratio:

BSM's expense ratio is 0.25%, which is considered average for actively managed municipal bond ETFs.

Investment Approach and Strategy:

Strategy: BSM actively manages its portfolio to select high-quality municipal bonds maturing in 2033. This targeted approach aims to generate predictable returns and mitigate interest rate risk.

Composition: The ETF holds a diversified portfolio of municipal bonds from various states and municipalities. The underlying bonds are primarily rated Aa or higher, indicating high credit quality.

Key Points:

• BSM offers tax-exempt income and predictable maturity.
• The ETF is actively managed by experienced professionals.
• BSM has a competitive expense ratio and good liquidity.

Risks:

• Interest rate risk: BSM is exposed to interest rate risk, which could impact its performance if rates rise.
• Market risk: The ETF is subject to the overall risks of the municipal bond market, including economic events and credit risk.
• Maturity risk: The 2033 maturity date could limit the potential for capital appreciation if interest rates fall.

Who Should Consider Investing:

BSM is suitable for investors seeking:

• Tax-exempt income from municipal bonds.
• A predictable return profile with a specific maturity date.
• Exposure to the municipal bond market with active management expertise.

Fundamental Rating Based on AI: 7.5

Based on an AI analysis considering financial health, market position, future prospects, and other factors, BSM receives a rating of 7.5. This indicates a solid overall profile with potential for growth. The rating considers the ETF's strong track record, active management approach, and tax-advantaged income. However, investors should be aware of the inherent risks associated with the municipal bond market and interest rate fluctuations.

Resources and Disclaimers:

• Invesco website: https://www.invesco.com/us/advisor/etfs/product-detail?audienceType=Investor&productId=BSM
• Morningstar website: https://www.morningstar.com/etfs/nysearca/bsm
• Lipper website: https://www.lipperalpha.com/us/en/funds/etf/overview/13782206/overview

This is not a recommendation to buy or sell any particular investment. This information is intended for informational purposes only and does not constitute financial advice. Please consult a qualified financial professional for personalized investment advice.