Recent flows into Invesco’s BulletShares ETFs unveil some key trends among investors.
Notably, investors in BulletShares ETFs are staying investment grade and largely keeping duration short- to intermediate-term. However, fixed income ETFs with longer durations are seeing a recent uptick in attention.
Risk-averse investors are sticking to the short end of the yield curve, while investors willing to bet interest rates will fall are beginning to take on more duration risk.
The funds in Invesco’s BulletShares ETFs lineup that have seen the greatest flows over a one-week period include the Invesco BulletShares 2025 Corporate Bond ETF (BSCP ), the Invesco BulletShares 2027 Corporate Bond ETF (BSCR ), and the Invesco BulletShares 2030 Corporate Bond ETF (BSCU ).
BSCP has accreted $30 million in the past week, bringing total assets to $2.8 billion. The fund has seen $76 million over a four-week period and $819 million year to date. BSCP is the most popular BulletShares ETF year to date, as measured by net flows.
BSCR, which extends duration slightly, has seen $17 million in one-week flows and $49 million in four-week flows. The fund has garnered $331 million year to date. BSCR has $1.0 billion in assets.
BSCU, the longest duration offering and the smallest with $242 million in assets, has accreted $12 million in one week. Flows have been fairly steady in 2023, as the fund has accreted $19 million in four weeks, bringing year-to-date flows to $97 million.
Why Use Investment Grade BulletShares ETFs Instead of Individual Bonds?
Invesco’s BulletShares ETFs can be used to build customized fixed income portfolios for clients’ desired maturity profiles, risk preferences, and investment goals.
Many advisors use BulletShares ETFs as they offer greater control, diversification, and improved liquidity than a ladder of individual bonds. Bond portfolios tend to require a higher number of securities to maintain ideal diversification, which can be impractical and time-consuming to trade, "according to Invesco":https://www.invesco.com/us/en/insights/potential-benefits-of-bullet-shares-video-series.html.
BSCP, BSCR, and BSCU each charge 10 basis points.
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