Invesco rolls out ‘BulletShares’ corporate bond ETFs in Europe

May 29th, 2024 | By | Category: Fixed Income

Invesco has begun introducing its ‘BulletShares‘ fixed-maturity ETFs in Europe, offering exposure to portfolios of bonds that mature in a specific year.

Paul Syms, Head of EMEA Fixed Income and Commodity ETF Product Management at Invesco

Paul Syms, Head of EMEA Fixed Income and Commodity ETF Product Management 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.

Paul Syms, Head of EMEA Fixed Income and Commodity ETF Product Management at Invesco, commented: “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 and, as each ETF reaches maturity, the investor rolls the proceeds into the next one launched. 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.”

Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco, added: “Institutional investors often employ a strategy where they build a portfolio of bonds that produces an income stream that closely matches their liabilities. Our new BulletShares range offers all investors the tools to create a similar strategy but with the added benefits of greater diversification and the transparency and trading efficiency of an ETF structure. These ETFs 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.”

Invesco’s initial BulletShares offering includes five ETFs targeting maturities from 2026 to 2030. Each ETF tracks a respective Bloomberg Target Maturity USD Corporate Bond Screened Index, comprising US dollar-denominated, investment-grade, fixed-rate, taxable corporate bonds globally.

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 are available on the London Stock Exchange in USD and GBP, on Euronext Milan in EUR, and on the SIX Swiss Exchange in CHF, with both accumulating and distributing share classes offered. The suite is detailed as follows:

Invesco BulletShares 2026 USD Corporate Bond UCITS ETF (Acc: BS6A LN; Dist: BU26 LN)
Invesco BulletShares 2027 USD Corporate Bond UCITS ETF (Acc: BS7A LN; Dist: BS27 LN)
Invesco BulletShares 2028 USD Corporate Bond UCITS ETF (Acc: BS8A LN; Dist: BS28 LN)
Invesco BulletShares 2029 USD Corporate Bond UCITS ETF (Acc: BS9A LN; Dist: BS29 LN)
Invesco BulletShares 2030 USD Corporate Bond UCITS ETF (Acc: BS0A LN; Dist: BS30 LN)

The expense ratio for each ETF is set at 0.10%.

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