4 min readBy Beqa Bumbeishvili ETF Insider
How does the BSJO ETF work?
The BSJO 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 Invesco BulletShares 2024 USD High Yield Corporate Bond ETF (BSJO) is managed by Invesco Indexing LLC, the index provider affiliated with Invesco Capital Management LLC.
The Invesco BulletShares 2024 High Yield Corporate Bond ETF (BSJO) focuses on investing in high yield corporate bonds with maturities in the year 2024. These bonds typically pay a fixed amount of taxable interest and have credit ratings ranging from BB+ from S&P Global Ratings or Fitch Ratings to Ba1 from Moody's. To be eligible for inclusion in the Underlying Index, bonds must also have a minimum average credit rating of CCC- and at least $200 million in face value outstanding. The ETF's holdings are market value weighted, with a 5% limit on individual issuers, and it generally holds bonds until they mature, are called, or no longer meet the eligibility criteria. The ETF will terminate around December 15, 2024, and any remaining assets will be distributed to shareholders. During the final year, the portfolio transitions to cash and cash equivalents, and the fund does not follow a target date strategy.
BSJO, the Invesco BulletShares 2024 High Yield Corporate Bond ETF, primarily tracks the performance of the Underlying Index, which consists of U.S. dollar-denominated high yield corporate bonds, commonly known as junk bonds, with maturities or effective maturities in the year 2024. The ETF's investment strategy aligns with the guidelines and procedures set by Invesco Indexing LLC, the affiliated Index Provider. The Underlying Index includes bonds from companies domiciled in the U.S., Canada, Western Europe, or Japan, with specific eligibility criteria such as minimum credit ratings and face value outstanding. BSJO employs a market value-weighted approach with a 5% issuer limit and aims to hold bonds until maturity, call, or no longer meeting eligibility requirements. It is important to note that the fund will terminate on or about December 15, 2024, and its portfolio will transition to cash and cash equivalents as the 2024 Bonds mature during the last twelve months of operation. BSJO utilizes a sampling methodology to achieve its investment objective and avoids concentrating investments in any one industry or group of industries, in line with the concentration policy.
The correlation aspect of the Invesco BulletShares 2024 High Yield Corporate Bond ETF (BSJO) is primarily associated with its underlying index, which measures the performance of U.S. dollar-denominated high yield corporate bonds set to mature or have effective maturities in the year 2024. As a high-yield bond ETF, BSJO tends to exhibit a moderate to strong correlation with movements in interest rates, credit spreads, and economic conditions. It is often considered as a tool for income-seeking investors looking to add diversification to their portfolios while accepting a higher level of credit risk.
The Invesco BulletShares 2024 High Yield Corporate Bond ETF (BSJO) focuses on the high-yield corporate bond sector with a maturity date in the year 2024. This ETF primarily invests in U.S. dollar-denominated junk bonds and aims to provide exposure to higher yielding fixed-income securities. While it offers the potential for enhanced income, investors should be aware of the higher risk associated with junk bonds, especially when economic conditions may impact the creditworthiness of these issuers. BSJO's portfolio is diversified across various industries, reflecting the composition of the high-yield bond market.
The exposure characteristic of the Invesco BulletShares 2024 High Yield Corporate Bond ETF (BSJO) revolves around a focused investment strategy in the U.S. dollar-denominated high yield corporate bond market with maturities or effective maturities in the year 2024. This ETF seeks to track the performance of a portfolio primarily consisting of junk bonds and utilizes a sampling methodology to achieve its investment objective. The bonds included in the underlying index must meet specific criteria, such as having a maximum credit rating of BB+ from S&P Global Ratings, a division of S&P Global Inc., or Fitch Ratings Inc., and a minimum average credit rating of CCC- from S&P, Fitch, and Moody''s Investors Service, Inc. Additionally, the ETF follows a concentration policy, investing more than 25% of its net assets in securities of issuers only when the underlying index reflects a concentration in that particular industry or group of industries.
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