Invesco adds EUR corporate bond ETFs to ‘BulletShares’ line-up

Jun 25th, 2024 | By | Category: Latest news

Invesco has expanded its ‘BulletShares‘ fixed-maturity ETF suite in Europe with a new line of funds delivering access to euro-denominated corporate bond portfolios, each maturing in a specific year.

Gary Buxton, Head of EMEA ETFs at Invesco

Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco.

Unlike typical fixed income ETFs that frequently rotate bonds to sustain specific maturity profiles, BulletShares ETFs hold their underlying bonds until maturity at which point the funds liquidate.

They provide monthly income streams as well as a terminal cash distribution, thereby emulating the characteristics of individual bonds. Additionally, these funds offer the advantages of enhanced liquidity and reduced issuer-specific risk due to the diversified nature of the ETF structure.

Investors have the flexibility to tailor their portfolios with these funds to align with anticipated future cash flow needs, utilizing ETFs with varying maturity dates.

Invesco’s latest BulletShares product line consists of five ETFs targeting maturities from 2026 to 2030. Each ETF tracks a target-maturity Bloomberg EUR Corporate Bond Screened Index, comprising euro-denominated, investment-grade, fixed-rate, taxable corporate bonds.

To qualify for inclusion, bonds must have a minimum outstanding par amount of €300 million and a maturity date aligning with the target year of the index. Additionally, bonds issued by companies engaged in controversial activities or facing significant ESG-related controversies are excluded.

These ETFs, which have been listed on Deutsche Börse Xetra in euros, each come with an expense ratio of 0.10%. They are classified as Article 8 products under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).

The funds are outlined below:

Invesco BulletShares 2026 EUR Corporate Bond UCITS ETF (BE26 GY)
Invesco BulletShares 2027 EUR Corporate Bond UCITS ETF (BE27 GY)
Invesco BulletShares 2028 EUR Corporate Bond UCITS ETF (BE28 GY)
Invesco BulletShares 2029 EUR Corporate Bond UCITS ETF (BE29 GY)
Invesco BulletShares 2030 EUR Corporate Bond UCITS ETF (BE30 GY)

The funds complement Invesco’s initial line of BulletShares ETFs which debuted in Europe last month and provide access to portfolios of US dollar-denominated corporate bonds with target maturities between 2026 and 2030.

Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco, commented: “Fixed-maturity ETFs can help investors satisfy a variety of objectives, from matching cash flow with their future liabilities to filling a gap in the maturity profile of their existing bond portfolio. Sophisticated strategies once used only by institutions large enough to invest directly in individual bonds can now be replicated by other investors through simple BulletShares ETFs. These precision tools could help pension funds match their liabilities but equally provide a simple, low-cost solution for parents needing to plan for school fees or someone saving for a house purchase.”

Paul Syms, Head of EMEA Fixed Income and Commodity ETF Product Management at Invesco, added: “Investors can use our BulletShares ETFs for longer-term financial planning through what’s known as bond laddering. This strategy typically involves investing in a range of fixed-maturity ETFs – say, for example, in each of our current range from 2026 to 2030 – and, as each ETF reaches maturity, the investor rolls the proceeds into the next one launched, in this case one with a 2031 maturity date. This would provide a more predictable income to either be taken by the investor on a quarterly basis or be automatically accumulated within the fund.”

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