Invesco builds out BulletShares suite with two longer maturity ETFs

Aug 10th, 2018 | By | Category: Fixed Income

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Invesco has extended its suite of defined maturity BulletShares ETFs with the launch of the BulletShares 2028 Corporate Bond ETF (BSCS US) and the BulletShares 2026 High Yield Corporate Bond ETF (BSJQ US).

Dan Draper, Global Head of ETFs at Invesco.

Dan Draper, Global Head of ETFs at Invesco.

The new funds have been listed on NYSE Arca.

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

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

With maturity dates spanning from 2018 to 2028, the ETFs track indices composed of 20 to 400 corporate bonds with effective maturities in the same calendar year as each fund’s maturity. By combining funds of varying maturities, investors can build a portfolio that meets their future cash requirements.

“The longer maturity date of the two new Invesco BulletShares ETFs will further 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. “Invesco is committed to accelerating growth in the BulletShares suite to provide even better value to existing and future shareholders of the decade-old product line. These new ETFs elevate the goal-oriented investment experience for smaller investors who may not necessarily have the ability to invest in individual bond ladders.”

Jason Bloom, Director of Global Macro ETF Strategy at Invesco, added, “Using BulletShares as a means of holding bonds to maturity may help to insulate investors from the risk of rising rates, while further adding value by solving the headache of finding and trading individual bonds.”

The BulletShares suite is composed of ten investment grade corporate bond ETFs and eight high-yield corporate bond ETFs.

BSCS tracks the Nasdaq BulletShares USD Corporate Bond 2028 Index, while BSJQ tracks the Nasdaq BulletShares USD High Yield Corporate Bond 2026 Index.

To be eligible for inclusion in a BulletShares fund, a bond must have a minimum issuance size of $500 million, and the weight of a single issuer is capped at 5% within each ETF.

They have been priced in line to other ETFs in the line-up: the investment grade ETF comes 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 investing in either investment-grade corporate bonds or municipal bonds. Branded iShares ‘iBonds’ ETFs, the corporate bond strategies also come with expense ratios of 0.10%, while the municipal bond ETFs are 0.18%.

According to recent filings with the US Securities and Exchange Commission (SEC), Invesco is planning on broadening the BulletShares suite to include a municipal bond offering.

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