Invesco builds out BulletShares defined maturity suite with new EMD ETFs

Oct 5th, 2018 | By | Category: Fixed Income

Invesco has launched a new suite of defined maturity BulletShares ETFs providing exposure to portfolios of emerging markets debt maturing in a given year.

Dan Draper, Global Head of ETFs at Invesco.

Dan Draper, Global Head of ETFs at Invesco.

Unlike the majority of fixed income ETFs, which hold bonds for a limited period of time to maintain a specific maturity exposure, Invesco’s BulletShares ETFs hold underlying bonds until maturity, at which point the they liquidate.

The funds offer a monthly income as well as a cash distribution at termination, thereby acting like an individual bond.

The ETF structure benefits investors, however, by offering increased liquidity and the reduction of issuer-specific risk. And by combining funds of varying maturities, investors can build portfolios that meet their future cash requirements.

“The new BulletShares Emerging Markets ETFs continue to democratize the bond laddering process for investors, offering a convenient and liquid way to meet the market for defined income needs,” said Dan Draper, Global Head of ETFs at Invesco. “Offering new debt exposure in the BulletShares family speaks to Invesco’s commitment to accelerating growth in the decade-old suite.”

Jason Bloom, Director of Global Macro ETF Strategy at Invesco, added, “An increasing number of investors are seeking opportunities in emerging markets debt, which offers relatively attractive yields based on comparable credit ratings. Using BulletShares as a means of holding bonds to maturity may help to insulate investors from the risk of rising rates while offering overall portfolio diversification.”

The initial line-up of four BulletShares Emerging Markets ETFs target bonds maturing in consecutive years from 2021 through 2024.

The ETFs track Nasdaq BulletShares USD Emerging Markets Debt Indices where eligible bonds are issued in US dollars by either government or corporate issuers in one of 22 emerging market countries. The indices include non-defaulted bonds from across the credit rating spectrum with outstanding face values of $500 million for government bonds and $300m for corporate issues.

The four ETFs have launched on NYSE Arca, each with an expense ratio of 0.29%. The line-up is as follows:

Invesco BulletShares 2021 USD Emerging Markets Debt ETF (BSAE US)
Invesco BulletShares 2022 USD Emerging Markets Debt ETF (TBSBE US)
Invesco BulletShares 2023 USD Emerging Markets Debt ETF (BSCE US)
Invesco BulletShares 2024 USD Emerging Markets Debt ETF (BSDE US)

Although Invesco has not yet confirmed further additions to the suite, the range of Nasdaq BulletShares EMD indices currently includes references for maturity years up to 2028.

Invesco’s other lines of BulletShares ETFs consists of ten investment grade corporate bond ETFs and eight high-yield corporate bond ETFs. The investment grade ETFs come with an expense ratio of 0.10%, while the high-yield equivalent costs 0.42%.

BlackRock is the other major provider to offer defined maturity ETFs, including 21 funds across investment-grade corporate bond and municipal bond suites. Branded iShares ‘iBonds’ ETFs, the ETF come with expense ratios of 0.10% and 0.18% respectively.

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