Build Asset Management’s New Bond Allocation Fund Pursues Risk Mitigation While Seeking Upside Potential

Build Asset Management today launched the BUILD Bond Innovation ETF (NYSE Arca: BFIX), a bond allocation fund designed for a modern global environment defined by low interest rates and constrained economic growth. The fund seeks to outperform traditional bond strategies under the continuation of low yields and/or rising prices in equity markets.

BFIX typically has 90% to 95% of its holdings in investment-grade fixed income assets, with the intent of providing downside risk management over the long term. The fund seeks to maintain a moderate duration profile and requires investment-grade credit quality in its bond holdings.

BFIX goes on the offense with the remainder of its assets in an actively managed options overlay on U.S. large-cap equities, seeking a risk-managed exposure to their price performance. The combination of this advanced options strategy and prudent fixed income profile is designed to mitigate risk during broad market drawdown events while seeking upside potential.

“We designed BFIX with the voice of the American retiree and traditional bond investor in mind who often wonder how they can achieve meaningful returns with a defensive mindset,” said John Ruth, co-founder and CEO of Build Asset Management. “We hope BFIX will serve as a timely compliment to a well-diversified portfolio for years to come.”

“For the past forty years, bonds have been on a relentless bull run – diversifying portfolios, producing income, and reducing volatility. However, due to ever-declining yields, bond allocations have seen a steady reduction in their contributions to overall portfolio returns,” said Matt Dines, co-founder and CIO at Build Asset Management. “Bond investors are currently in a risk versus return conundrum, and BFIX seeks to address the low yield problem without taking on more duration risk or decreasing credit quality.”

Added Dines: “Our approach combines active fixed income management, an equity options overlay, and a rules-based trading framework that keeps the balance of fixed income and options in line with risk metrics. The strategy seeks to provide meaningful total return potential with preferred risk-adjusted return metrics relative the strategy’s benchmark.”

BFIX has an expense ratio of 0.5%.

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