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BSJK: High Yield, Yet Low Duration

Published Fri, 12 Apr 2019 09:35:00 -0400 on Seeking Alpha

Investment Thesis
Roughly ten years ago, Guggenheim introduced its ‘BulletShares’ ETF suite that offers investors bond portfolios that provide actual maturity dates. Invesco purchased this portfolio of ETFs (along with the rest of Guggenheim’s ETF suite) one year ago, and these funds are now managed and marketed within Invesco’s investment management division. This thesis focuses on the Invesco BulletShares 2020 High Yield Corporate Bond ETF (ticker: BSJK), a portfolio consisting of non-investment grade bonds that mature sometime throughout 2020. The enticing characteristics of BSJK’s fixed income portfolio includes low duration, low credit risk, yet a relatively high distribution rate.
In a low interest-rate environment with tight credit spreads, searching for yield assumes some type of risk (typically credit and/or duration). However, BSJK provides investors with an intriguing risk/reward profile, as it encompasses less duration than most high-yielding bond funds and provides a greater yield than most short-duration funds. Therefore, it can be considered a “sweet spot” for those investors that are searching for something in between.
Fund Overview – as of 04/09/19
[source: BSJK website]
Key Stats

Portfolio Composition

Holdings Analysis

As shown in the chart above, BSJK’s top 10 holdings equate to roughly 34% of the total portfolio and its top 20 holdings equate to roughly 54%. For a bond portfolio that matures in... Read more