Changes Are Coming for This Invesco Bond Fund
The Invesco BulletShares 2026 Corporate Bond ETF's bonds will mature in 2026. Here's what investors should do.
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
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.
Related Content
-
I Met With 100-Plus Advisers to Develop This AI Road MapFor financial advisers eager to embrace AI but unsure where to start, this road map will help you integrate the right tools and safeguards into your work.
-
The Referral Revolution: How to Grow Your Business With TrustYou can attract ideal clients by focusing on value and leveraging your current relationships to create a referral-based practice.
-
This Is How You Can Land a Job You'll Love"Work How You Are Wired" leads job seekers on a journey of self-discovery that could help them snag the job of their dreams.
-
I Met With 100-Plus Advisers to Develop This Road Map for Adopting AI
For financial advisers eager to embrace AI but unsure where to start, this road map will help you integrate the right tools and safeguards into your work.
-
The Referral Revolution: How to Grow Your Business With Trust
You can attract ideal clients by focusing on value and leveraging your current relationships to create a referral-based practice.
-
This Is How You Can Land a Job You'll Love
"Work How You Are Wired" leads job seekers on a journey of self-discovery that could help them snag the job of their dreams.
-
Fed Vibes Lift Stocks, Dow Up 515 Points: Stock Market TodayIncoming economic data, including the January jobs report, has been delayed again by another federal government shutdown.
-
65 or Older? Cut Your Tax Bill Before the Clock Runs OutThanks to the OBBBA, you may be able to trim your tax bill by as much as $14,000. But you'll need to act soon, as not all of the provisions are permanent.
-
The Key to a Successful Transition When Selling Your Business: Start the Process Sooner Than You Think You Need ToWay before selling your business, you can align tax strategy, estate planning, family priorities and investment decisions to create flexibility.
-
I'm a Financial Adviser: This Is the $300,000 Social Security Decision Many People Get WrongDeciding when to claim Social Security is a complex, high-stakes decision that shouldn't be based on fear or simple break-even math.
-
4 Ways Washington Could Put Your Retirement at Risk (and How to Prepare)Legislative changes, such as shifting tax brackets or altering retirement account rules, could affect your nest egg, so it'd be prudent to prepare. Here's how.
