5 min readBy Ron Koren ETF Insider
How does the BSJN ETF work?
The BSJN ETF is a specialized investment fund that focuses on a specific sector. This exchange-traded fund offers investors exposure to a range of companies in this sector.
The issuer of the BSJN ETF is Invesco Indexing LLC, which also serves as the Index Provider for the fund. Invesco Indexing LLC is affiliated with Invesco Capital Management LLC, the investment adviser, and Invesco Distributors, Inc., the distributor of the ETF. The BSJN ETF aims to replicate the performance of a portfolio of U.S. dollar-denominated high yield corporate bonds, commonly referred to as junk bonds, with maturities in the year 2023. The Underlying Index, compiled and maintained by the Index Provider, selects eligible bonds based on specific criteria, including credit ratings and face value outstanding, ensuring that the fund tracks a diversified selection of high yield bonds with a 2023 maturity focus. Additionally, the BSJN ETF employs a sampling methodology to achieve its investment objective, and it follows concentration policies to manage industry exposure effectively.
The Invesco BulletShares 2023 High Yield Corporate Bond ETF (BSJN) primarily focuses on investing in U.S. dollar-denominated high yield corporate bonds, commonly known as junk bonds, with maturities or effective maturities in the year 2023. While the fund's main goal is not dividend-centric, it does distribute income based on the interest payments received from its underlying bonds. These distributions typically occur as the fund holds and collects interest from the bonds in its portfolio. Investors should note that the specific amount and frequency of these dividend distributions may vary based on prevailing interest rates and the performance of the underlying bonds, but they can provide a potential source of income for investors seeking exposure to high yield corporate bonds.
Tracking the performance of U.S. dollar-denominated high yield corporate bonds set to mature or have effective maturities in the year 2023 is the primary objective of the BSJN Tracking ETF. This ETF, managed by Invesco Indexing LLC, closely follows the benchmark index that comprises these 2023 Bonds. The index includes bonds from companies domiciled in the U.S., Canada, Western Europe, or Japan, with specific credit rating and face value criteria. BSJN Tracking employs a market value weighting strategy, with a maximum issuer limit, and aims to hold bonds until maturity, call, or no longer meeting eligibility requirements. Investors seeking exposure to this segment of the bond market may find BSJN Tracking a suitable option.
The correlation aspect of the Invesco BulletShares 2023 High Yield Corporate Bond ETF (BSJN) is primarily influenced by its focus on high yield corporate bonds with maturities or effective maturities in the year 2023. These junk bonds typically exhibit lower correlation with traditional equity markets but may have varying correlations with other fixed income instruments. Investors interested in BSJN's correlation behavior can use ETF Insider's web app to study its relationships with different asset classes and sectors, gaining valuable insights into potential diversification benefits and risk management strategies. Additionally, the tool's visualization capabilities will help investors identify overlaps between BSJN and other ETFs in their portfolios, enhancing their overall investment decision-making process.
The Invesco BulletShares 2023 High Yield Corporate Bond ETF (BSJN) is primarily focused on the high yield corporate bond sector. BSJN invests at least 80% of its total assets in U.S. dollar-denominated high yield corporate bonds with maturities or effective maturities in the year 2023. These bonds are often referred to as junk bonds due to their higher risk profile. The fund seeks to provide investors with exposure to this specific segment of the fixed income market, offering potentially higher yields compared to investment-grade bonds. However, it's important to note that the high yield bond sector can be more volatile and may carry increased credit risk, making it suitable for investors with a higher risk tolerance seeking income opportunities.
The exposure characteristic of the Invesco BulletShares 2023 High Yield Corporate Bond ETF (BSJN) primarily revolves around U.S. dollar-denominated high yield corporate bonds, commonly referred to as junk bonds, with maturities or effective maturities in the year 2023. The ETF offers investors access to this specific segment of the fixed-income market, focusing on bonds issued by companies domiciled in the U.S., Canada, Western Europe, or Japan, with credit ratings typically no higher than BB+ from S&P Global Ratings, Ba1 from Moody''s, or CCC- on average from S&P, Fitch, and Moody''s. This exposure allows investors to target higher yields with a maturity date in line with their investment horizon.
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