Insight

Build efficient bond ladders with Invesco’s BulletShares ETFs

Point of view, looking up ladder sticking through hole in ceiling revealing blue sky
Key takeaways
1

By staggering bond maturity dates, bond ladders can offer a measure of stability and adaptability (through regular cash flows), helping investors stay on course regardless of interest rate movements.

2

Investors can use defined maturity ETFs to build bond ladders that can help provide some stability regardless of where rates move.

3

Combining bond and ETF benefits, BulletShares UCITS ETFs make it easier to build cost-efficient, diversified ladders across timeframes.

As markets evolve, fixed-income investors are turning to strategies that offer both resilience and flexibility. Bond laddering, especially using defined maturity ETFs, has become an efficient way to manage interest rate risk, enhance diversification, and support long-term income goals.

Why consider bond laddering?

Bond ladders, portfolios of bonds with staggered maturity dates, can enhance diversification, provide cash flow flexibility and help reduce exposure to interest rate volatility. As each bond matures, proceeds can be reinvested at current rates or used to meet certain financial goals, such as retirement or major purchases. 

Bond investors have endured a whipsaw environment in interest rates that has introduced more unwanted volatility to portfolios. And with continued uncertainty over the US Federal Reserve rate policy, inflation, and geopolitical, fixed-income investors are looking for stability.

It’s therefore no surprise investors are turning to defined maturity ETFs, and how they can be used to build efficient bond ladders to introduce predictability into their income streams.

Using defined maturity ETFs for bond laddering

Defined maturity ETFs, such as our BulletShares UCITS ETF range, offer a streamlined way to construct bond ladders. Our ETFs hold a diversified basket of bonds that mature in a specific year, combining the benefits of individual bonds with the convenience, diversification, and liquidity of ETFs.  

Unlike traditional fixed income funds, which typically maintain a constant duration and are more sensitive to interest rate changes, BulletShares ETFs allow investors to:

  • Customise maturity profiles to align with financial goals
  • Reduce interest rate risk by holding bonds to maturity
  • Reinvest proceeds at potentially higher yields when rates rise
  • Maintain higher-yielding bonds when rates fall

How bond ladders work: a hypothetical example

Diagram of a bond ladder showing reinvestment of maturing bonds over three years to maintain staggered maturities.

For illustrative purposes only. 

Consider a bond ladder built with BulletShares ETFs maturing annually from 2026 to 2031. Each year, as an ETF matures, the proceeds can be reinvested into a new ETF with a later maturity, maintaining the ladder’s structure and adapting to the current rate environment.

With bond ladders, when interest rates are rising, investors can reinvest any proceeds from bonds maturing from the ladder into new bonds with higher rates. Meanwhile, if rates fall, investors may choose to reinvest less of the maturity proceeds into new bonds with lower rates, potentially anticipating attractive yields ahead. And, because bond ladders include bonds purchased at different times, investors may still benefit from holdings that were bought when rates were higher.

Using BulletShares ETFs in bond ladders

Investing across various BulletShares UCITS ETF maturities can enable investors to build a cost-effective, diversified laddered portfolio to manage interest rate risk and cash flows. Our range offers targeted exposure to USD (with GBP-hedged share classes available for those seeking to mitigate currency risk), and EUR investment grade corporate bonds, with maturity ranges from 2026 to 2030.

Whatever you’re looking to accomplish with your bond portfolio, Invesco’s range of BulletShares ETFs can offer convenient, cost-effective solutions to help meet your potential income goals. 

  • Investment risks

    For complete information on risks, refer to the legal documents.

    The value of investments, and any income from them, will fluctuate. This may partly be the result of changes in exchange rates. Investors may not get back the full amount invested. 

    The creditworthiness of the debt the Fund is exposed to may weaken and result in fluctuations in the value of the Fund. There is no guarantee the issuers of debt will repay the interest and capital on the redemption date. The risk is higher when the Fund is exposed to high yield debt securities. 

    Changes in interest rates will result in fluctuations in the value of the fund.

    The Fund may be exposed to the risk of the borrower defaulting on its obligation to return the securities at the end of the loan period and of being unable to sell the collateral provided to it if the borrower defaults.

    The Fund intends to invest in securities of issuers that manage their ESG exposures better relative to their peers. This may affect the Fund’s exposure to certain issuers and cause the Fund to forego certain investment opportunities. The Fund may perform differently to other funds, including underperforming other funds that do not seek to invest in securities of issuers based on their ESG ratings. 

    The Fund is invested in a particular geographical region, which might result in greater fluctuations in the value of the Fund than for a fund with a broader geographical investment mandate.

    It may be difficult for the Fund to buy or sell certain instruments in stressed market conditions. Consequently, the price obtained when selling such instruments may be lower than under normal market conditions.

    Currency hedging between the base currency of the Fund and the currency of the Share class may not completely eliminate the currency risk between those two currencies and may affect the performance of the Share class.

    The term of the Fund is limited. The Fund will be terminated on the Maturity Date. During the Maturity Year, as the corporate bonds held by the Fund mature and the Fund’s portfolio transitions to cash and Treasury Securities, the Fund’s yield will generally tend to move toward the yield of cash and Treasury Securities and thus may be lower than the yields of the corporate bonds previously held by the Fund and/or prevailing yields for corporate bonds in the market. The issuers of debt securities (especially those issued at high interest rates) may repay principal before the maturity of such debt securities. This may result in losses to the Fund on debt securities purchased at a premium. The Fund may be terminated in certain circumstances which are summarised in the section of the Prospectus titled “Termination”.

    Important Information

    An investment in these funds is an acquisition of units in a passively managed, index tracking fund rather than in the underlying assets owned by the fund.

    Data as at June 2025, unless otherwise stated. By accepting this material, you consent to communicate with us in English, unless you inform us otherwise. This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

    Views and opinions are based on current market conditions and are subject to change. For information on our funds and the relevant risks, refer to the Key Information Documents/Key Investor Information Documents (local languages) and Prospectus (English, French, German), and the financial reports, available from www.invesco.eu. A summary of investor rights is available in English from www.invescomanagementcompany.ie. The management company may terminate marketing arrangements. UCITS ETF’s units / shares purchased on the secondary market cannot usually be sold directly back to UCITS ETF. Investors must buy and sell units / shares on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units / shares and may receive less than the current net asset value when selling them. For the full objectives and investment policy please consult the current prospectus.

    Index: “Bloomberg®” and the indices referenced herein (the “Indices”, and each such index, an “Index”) are trademarks or service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the Index (collectively, “Bloomberg”) and/or one or more third-party providers (each such provider, a “Third-Party Provider,”) and have been licensed for use for certain purposes to Invesco (the “Licensee”). To the extent a Third-Party Provider contributes intellectual property in connection with the Index, such third- party products, company names and logos are trademarks or service marks, and remain the property, of such Third-Party Provider. Bloomberg is not affiliated with the Licensee or a Third-Party Provider, and Bloomberg does not approve, endorse, review, or recommend the financial products referenced herein (the “Financial Products”). Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to the Indices or the Financial Products. 

    Issued by Invesco Investment Management Limited, Ground Floor, 2 Cumberland Place, Fenian Street, Dublin 2, Ireland, regulated by the Central Bank of Ireland.

    EMEA4593409/2025