On the latest episode of ETF 360, VettaFi head of research Todd Rosenbluth interviewed BondBloxx co-founder Joanna Gallegos. The two discussed BondBloxx’s suite of fixed income products, which includes the BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF), the BondBloxx BB-Rated USD High Yield Corporate Bond ETF (XBB), and the BondBloxx B-Rated USD High Yield Corporate Bond ETF (XB) among others.
Fixed Income Investor Needs
“BondBloxx is the only ETF issuer that is 100% focused on fixed income ETFs,” Gallegos said. She noted that there has been historically a gap between investor fixed income needs and ETF offerings. “We came together to close that gap,” she added.
Speaking to the rate environment and the notion that bonds are back, Gallegos said “it’s not just that bonds are back, but the income is back in fixed income.” Given the structural shift in the environment, Gallegos thinks investors need to be allocating into fixed income.
The Short End of the Curve
Gallegos and Rosenbluth discussed that though there are opportunities at the long end of the curve, investors have been staying shorter. She pointed to safety as a big driver. The performance has been there, “You can’t really ignore yields of over 4%.”
Additionally, she pointed out that treasury income is state tax-exempt, making it incredibly tax efficient.
But the farther end of the curve is also gaining attention, and Gallegos shared that they are seeing activity in their products that are focused on the other side of the curve. “The treasury use case has been very powerful for investors overall in 2023.”
Speaking to yield Gallegos said, “Our view is you don’t want to shy away from corporate credit right now.”
Given the nature of the current environment, Gallegos thinks investors should not ignore the category of credit. Rosenbluth concurred, adding, “this is a completely different environment.”
To watch past episodes of ETF 360, visit VettaFi’s ETF 360 Channel.