Changes Are Coming for This Invesco Bond Fund

Scrabble tiles reading bonds sit on top of stacks of coins next to one hundred dollar bills

Invesco created its BulletShares suite of exchange-traded funds (ETFs) to help investors build bond ladders — a strategy that involves buying bonds with staggered maturity dates. But these funds can be useful in other ways.

In 2022, when we added Invesco BulletShares 2026 Corporate Bond (BSCQ) to the Kiplinger ETF 20, the list of our favorite ETFs, the fund met our objective of finding a short-term, high-quality corporate bond fund with below-average duration (a measure of interest-rate sensitivity).

Since then, the fund has exceeded expectations. From mid-2022 through October, BulletShares 2026 Corporate Bond returned 4.3% annualized, beating the 3.1% gain of the Bloomberg U.S. Aggregate Bond Index, with half the volatility.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

But as its name implies, all the bonds in the fund mature in 2026. That means as the IOUs it holds are paid off over the course of the year, the fund's portfolio will slowly morph from a short-term corporate debt fund into a cash fund.

Starting in July, says Justin Danfield, former senior fixed-income ETF strategist at Invesco, the fund will cease buying new bonds, and the fund's stakes in cash and 13-week Treasury bills will increase. Finally, sometime in mid-December 2026, the fund will close, and shareholders will receive a cash distribution of their shares.

What should investors do now?

If you hold shares in this fund, and you're using it primarily as a place to park short-term cash, you can stay put. Bear in mind, however, that the fund's yield, currently 4.0%, will start to shrink a bit starting in July, says Danfield.

T-bill yields, nearly 3.8% recently, are competitive with money market funds for now, but Danfield expects T-bill yields to fall as the Fed continues to lower short-term lending rates in 2026.

Otherwise, you could consider shifting assets in the BulletShares fund into one of the Kip ETF 20 core bond funds, the Fidelity Total Bond ETF (FBND) or the State Street DoubleLine Total Return Tactical ETF (TOTL). Meanwhile, we'll be assessing alternatives for the BulletShares fund in the coming months.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.