Advisors can use Invesco’s BulletShares ETFs to build customized fixed income portfolios for clients’ maturity profiles, risk preferences, and investment goals.
BulletShares ETFs offer the potential for monthly income and a cash distribution at the fund’s expected termination, similar to individual bonds. BulletShares can be used for various investment strategies, including potential rising interest rate protection, bond laddering, and lifestyle-driven planning.
“Advisors want to manage their interest rate sensitivity,” Todd Rosenbluth, head of research at VettaFi, said. “Through these ETFs they can benefit from the targeted exposure and gain diversified corporate bond exposure.”
Bond laddering is a particularly interesting use case for BulletShares ETFs. Many advisors have moved away from bond laddering due to the difficulty of execution, something bond ETFs have alleviated.
For customized fixed income investing, BulletShares ETFs hold several potential advantages over a ladder of individual bonds. Bond ETFs may offer greater control, diversification, and improved liquidity. Bond portfolios tend to require a higher number of securities to maintain ideal diversification, which can be fairly cumbersome and time-consuming to trade, according to Invesco.
Advisors can better manage a portfolio’s income stream and risk exposure by owning ETFs with different maturity dates.
The flexibility component comes down to the scalability of the fund suite across a range of client accounts. Large and small clients can have the same investment exposure at the exact same cost, something that’s very difficult to achieve using individual bonds, according to Invesco.
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BulletShares ETFs that are particularly popular right now include the Invesco BulletShares 2025 Corporate Bond ETF (BSCP B+), the Invesco BulletShares 2026 Corporate Bond ETF (BSCQ A-), and the Invesco BulletShares 2027 Corporate Bond ETF (BSCR A-).
Investors have allocated $463 million to BSCP over a three-month period. Meanwhile, BSCQ has accreted $197 and BSCR has seen $150 million in net flows.
For more news, information, and analysis, visit the Innovative ETFs Channel.
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