Benefits of BulletShares® ETFs
BulletShares® ETFs are designed to combine the benefits of individual bonds with the advantages of ETFs. These innovative products provide:
Ease of Use
2018 Maturity Update & FAQs
On Dec. 31, 2018, two more BulletShares® ETFs will mature and distribute their net assets to shareholders: The Invesco BulletShares 2018 Corporate Bond ETF (BSCI) and BulletShares 2018 High Yield Corporate Bond ETF (BSJI). These represented the 14th and 15th ETFs in the suite to successfully mature.
Important maturity information
The following is a schedule of important dates:
|12.27.2018||Final day of trading|
|12.27.2018||Maturity distribution announcement date|
|12.28.2018||Maturity distribution effective date|
|12.28.2018||Maturity distribution payable date|
As BSCI and BSJI approach maturity, their durations decrease. This drawdown helps to minimize the effects of interest rate volatility. In addition, the funds’ weighted average bond prices moved toward par, $100, without any adverse impact on the funds’ net asset value (NAV).
Frequently asked questions
Why are BSCI and BSJI maturing? Unlike traditional ETFs, which are meant to have a perpetual life, defined maturity ETFs have a specified maturity date, similar to bonds. Each individual BulletShares ETF holds bonds that are expected to mature in a specified year — BSCI’s and BSJI’s specified maturity year is 2018. At maturity, the fund’s net assets will be returned to shareholders.3
When will BSCI and BSJI mature and cease trading? BSCI and BSJI will cease trading on Dec. 28, 2018. Shareholders of record that day participated in the maturity distribution on the final business day of the year (Dec. 31, 2018.) A complete schedule is listed.
When will the proceeds be distributed? Distributions will be made on the final business day of the year — Dec. 31, 2018. Investors must hold the ETF on the record date (Dec. 28, 2018) to be part of the distribution payment.
How do investors receive their proceeds? Investors will receive their proceeds in much the same way they receive distribution proceeds on a monthly basis. Proceeds will be delivered to broker/dealers via the Depository Trust Company (DTC). Broker/dealers will then place the proceeds in customer accounts.
As the ETF approaches maturity, what happens to performance? Performance should not be affected. As the funds approach maturity, their respective durations will move lower, helping to minimize portfolio volatility. Over this same time period, the weighted average bond price of each fund’s portfolio should converge toward par ($100), which should not adversely affect the NAV of the funds.
In the last six months of the ETF’s maturity year, it is anticipated that the bonds in the portfolio will either mature or be called. Proceeds for these events will then be held either in cash or in cash equivalents such as US Treasury bills or commercial paper. During this period, the ETF’s yield may be lower than when its portfolio was more fully composed of bonds.
When do the individual bonds within the fund start to mature? How did that affect the fund? For BSCI, nearly all (99%) of the remaining bonds in the portfolio matured or will mature in 2018. The small number of bonds that represent the remaining value of the fund have call dates in 2018 and are anticipated to be called prior to the ETF’s maturity. For BSJI, less than a quarter of the bonds remaining in the 2018 index have maturity dates that extend beyond 2018. However, these bonds have call dates in 2018 and are anticipated to be called prior to maturity. If they are not called, the bonds will be sold at market prior to the ETF’s maturity date. Proceeds from maturity, call or sale will be held either in cash or in short-term securities such as US Treasury bills or commercial paper.
Performance should not be affected. As the funds approach maturity, their respective durations will move lower, helping to minimize portfolio volatility. Over this same time period, the weighted average bond price of each fund’s portfolio should converge toward par ($100), which should not adversely impact the NAV of the funds.
Can I re-invest my proceeds into another BulletShares target maturity ETF?3 Yes. BulletShares ETFs provide flexibility and convenience in managing fixed income exposure. As your 2018 BulletShares ETFs mature, you may want to consult with an advisor and have the distribution proceeds invested in a BulletShares ETF in a subsequent maturity year. BulletShares offer a variety of maturities ranging from 2019 to 2028 depending on your needs. See list of available BulletShares ETFs.
Will you launch additional BulletShares maturities? Invesco currently offers a line-up of 22 BulletShares® ETFs comprising investment grade bonds, high yield corporate bonds and emerging markets debt with maturity dates that range from 2019 through 2028. We will explore adding additional maturity dates based on market demand.
What are the tax implications? An ETF that has matured is treated as a sale for tax reporting purposes. Investors should consult their tax advisor for more complete information on their individual situation.
Can I sell a BulletShares ETF near the end of the year to avoid the liquidation? While BulletShares ETFs are liquid and can be sold until the last day of trading, investors should carefully consider the consequences of selling ETFs during the last week before maturity. Any trades made in the secondary market after December 26 will not settle prior to the ETF’s last day of trading. This may delay distribution of the proceeds to anyone buying shares in the interval from December 26th, through December 28th, as anyone purchasing shares on the secondary market during that interval will not be a shareholder of record as of the close of business December 28th. In addition, trading costs will be incurred for what is essentially a cash portfolio due to the liquidation of the underlying holdings prior to the ETF’s maturity. It may be prudent to await liquidating distributions to avoid trading costs and a delay in receiving proceeds.
BulletShares® ETFs are unlike traditional ETFs in that they have a defined maturity date similar to bonds. This allows ETF proceeds to be returned to shareholders at maturity.
The BulletShares® Maturity Process
BulletShares ETFs comprise individual bonds that mature or are expected to be called in a specific year. While a traditional fixed income ETF or mutual fund regularly buys and sells underlying bonds to maintain a fixed duration, BulletShares ETFs hold bonds until they mature. This results in a more bond-like experience with a BulletShares ETF's duration shortening as it nears maturity.
From Bonds to Cash
As the bonds underlying BulletShares ETFs approach maturity, bond proceeds are typically invested in cash or cash alternatives. As the final year progresses, the ETF's cash and US Treasury positions grow and its bond exposure decreases. This results in a lower current yield than when the portfolio was more fully composed of bonds.
BulletShares® Corporate Bond ETFs begin moving to cash in the final six months of the maturity year.
BulletShares® High Yield Corporate Bonds, Emerging Markets Debt and Municipal Bond ETFs start to move to cash in the final 12 months.
As a BulletShares ETF approaches maturity, its duration will move lower, helping to minimize portfolio volatility.
The charts below show the real life example of the final year of the Guggenheim BulletShares® ETFs.
The Invesco BulletShares 2018 ETFs matured on Dec. 31, 2018, and are no longer offered for sale. This information does not constitute an offer to sell or a solicitation of an offer to buy units of the funds.
Source: Invesco Distributors, Inc., Dec. 31,2018. Based on monthly NAV.
Finally, at the end of the calendar year, the BulletShares® ETF terminates and the fund assets, less any fees and expenses of the fund, are distributed to shareholders.
Opportunities for Reinvestment
As your 2019 BulletShares® ETFs near maturity, you may transfer your bond proceeds into another BulletShares ® ETF. BulletShares ETFs are available in a variety of maturities ranging from 2020 to 2028 to help investors meet their lifestyle and portfolio needs. View available BulletShares ETFs.
Matured BulletShares ETF Summary
To date, all of the 15 maturing BulletShares® ETFs have successfully transitioned.
The following matured Invesco Guggenheim BulletShares ETFs are no longer offered for sale. This information does not constitute an offer to sell, or a solicitation of an offer to buy units of the fund.
|Ticker||ETF Name||Maturity Date||Final Net Asset Value Per Share|
|BSCI||Invesco BulletShares 2018 Corporate Bond ETF||12/31/2018||$21.15|
|BSJI||Invesco BulletShares 2018 High Yield Corporate Bond ETF||12/31/2018||$25.12|
|BSCH||Guggenheim BulletShares 2017 Corporate Bond ETF||12/31/2017||$22.6290|
|BSJH||Guggenheim BulletShares 2017 High Yield Corporate Bond ETF||12/31/2017||$25.7230|
|BSCG||Guggenheim BulletShares 2016 Corporate Bond ETF||12/31/2016||$22.08361|
|BSJG||Guggenheim BulletShares 2016 High Yield Corporate Bond ETF||12/31/2016||$25.81599|
|BSCF||Guggenheim BulletShares 2015 Corporate Bond ETF||12/31/2015||$21.67973|
|BSJF||Guggenheim BulletShares 2015 High Yield Corporate Bond ETF||12/31/2015||$25.74107|
|BSCE||Guggenheim BulletShares 2014 Corporate Bond ETF||12/31/2014||$21.15144|
|BSJE||Guggenheim BulletShares 2014 High Yield Corporate Bond ETF||12/31/2014||$26.25136|
|BSCD||Guggenheim BulletShares 2013 Corporate Bond ETF||12/31/2013||$20.76709|
|BSJD||Guggenheim BulletShares 2013 High Yield Corporate Bond ETF||12/31/2013||$25.56137|
|BSCC||Guggenheim BulletShares 2012 Corporate Bond ETF||12/31/2012||$20.45780|
|BSJC||Guggenheim BulletShares 2012 High Yield Corporate Bond ETF||12/31/2012||$25.41900|
|BSCB||Guggenheim BulletShares 2011 Corporate Bond ETF||12/30/2011||$20.11990|