BondBloxx Co-Founder Says the Time for Precise Fixed Income Tools Is “Right Now”

As 10-year Treasury yields hit their highest level since 2011 and the Federal Reserve considers a possible 75-basis-point rate hike, BondBloxx Investment Management co-founder Joanna Gallegos believes that “the time for BondBloxx is right now.”

Appearing on CNBC’s “Closing Bell: Overtime” to discuss the company’s current market strategy, Gallegos explained that the company was created after its founders looked at where markets were in March 2020 and said they “need to be delivering better tools for institutional investors to manage their risk through markets like this,” before adding: “So, this is the exact time for a firm like BondBloxx in the products we have in market.”

Launched in October of 2021 to provide precision ETF exposures for fixed income investors, BondBloxx was co-founded by Gallegos along with ETF industry leaders Leland Clemons, Tony Kelly, Elya Schwartzman, Mark Miller, and Brian O’Donnell. The team has collectively built and launched over 350 ETFs at firms including BlackRock, JPMorgan, State Street, Northern Trust, and HSBC.

Gallegos told host Scott Wapner that, when speaking with investors, she’s “hearing that investors are reevaluating how they’re building risk in their portfolios through fixed income. So, one thing to think about as rates are changing and as markets are shifting, you need more specific exposure to tailor the way you want to manage that going forward.”

BondBloxx is looking to quickly expand its suite of ETFs. In May, the firm launched three new ETFs that track ratings-specific sub-indexes of the ICE BofA US Cash Pay High Yield Constrained Index. These three new products join the suite of seven sector-specific high yield ETFs that the high yield fixed income ETF issuer launched earlier this year. Also, Gallegos said that the firm just registered for an additional eight Treasury products that allow investors to get specific duration targets.

“We see this as just an opportunity to be using more precise tools, and that’s what we know the need is,” she added.

When it comes to high yield fixed income, Gallegos said that it “depends on the sector.” Energy, for example, “has had an incredible story in the last six months.” It just “depends on what market you’re looking at.”

“Investors … are trying to tailor their long-term exposures, but they also need something where they can take off individual components of the risk of that exposure or put it on,” she added.

For more news, information, and strategy, visit the Institutional Income Strategies Channel.