Invesco’s BulletShares ETFs offer a bond-like experience in an ETF wrapper.
BulletShares ETFs are a suite of fixed-term ETFs that enable investors to build customized portfolios tailored to specific maturity profiles, risk preferences, and investment goals. The firm on Thursday rolled out two more funds, expanding the maturities available to investors: the Invesco BulletShares 2032 Corporate Bond ETF (BSCW) and the Invesco BulletShares 2030 High Yield Corporate Bond ETF (BSJU).
BSJU charges a 42 basis point expense ratio, and BSCW charges a ten basis point expense ratio.
Similar to individual bonds, BulletShares ETFs offer the potential for monthly income and a cash distribution at the fund’s expected termination, according to Invesco. The funds also allow for greater diversification and a high degree of flexibility, allowing for portfolio customization.
According to Invesco, investors can select the maturity and duration risk profile that best meets their needs. This flexibility and customization can’t be found with traditional fixed income index funds, which rarely allow investors to customize maturities and duration risk profiles to their own needs.
According to Invesco, BulletShares ETFs can be used for various investment strategies, including potential rising interest rate protection, bond laddering, and lifestyle-driven planning.
Unlike a direct investment in a bond with a level coupon payment and a fixed payout at maturity, an ETF’s income distributions may vary over time. An ETF may make distributions at a greater (or lesser) rate than the coupon payments received from the ETF’s portfolio holdings, which will result in the ETF returning a lesser (or more significant) amount in liquidation proceeds than would otherwise be the case. The rate of ETF distribution payments may adversely affect the tax characterization of the returns received from an investment in the ETF relative to a direct investment in corporate bonds, according to Invesco.
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