What happens as BulletShares® ETFs approach maturity?
As BulletShares® ETFs 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, typically without any significant impact on the funds' net asset value (NAV).
Why do BulletShares® ETFs Mature?
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. At maturity, the fund’s net assets will be returned to shareholders.
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?
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).
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.
Can I re-invest my proceeds into another BulletShares® target maturity ETF?
Yes. BulletShares® ETFs provide flexibility and convenience in managing fixed income exposure. As your BulletShares® ETFs mature, you may want to consult with an advisor and explore having the distribution proceeds invested in a BulletShares® ETF in a subsequent maturity year. BulletShares® offer a variety of maturities depending on your needs. The following list details each of the available BulletShares® ETFs.
Will you launch additional BulletShares® maturities?
Invesco currently offers a line-up of 31 BulletShares® ETFs comprising investment grade bonds, high yield corporate bonds, emerging markets debt and municipal bonds with maturity dates that range from 2020 through 2029. We will explore adding additional maturity dates based on market demand.
What are the tax implications?
An ETF that has matured is typically treated as a sale for tax reporting purposes. Investors should consult their tax advisor for more complete information on their individual situation
Depository Trust Company (DTC) is one of the world's largest securities depositories. Founded in 1973 and based in New York City, the DTC is organized as a limited purpose trust company and provides safekeeping through electronic record-keeping of securities balances. It also acts as a clearinghouse to process and settle trades in corporate and municipal securities.
Invesco does not offer tax advice. Please consult your tax professional for information regarding your own personal tax situation.
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