In addition to the Federal Reserve raising interest rates, market volatility and economic uncertainty has pushed investors to Treasury ETFs. The Wall Street Journal reported that sales of Treasury bills, which mature in a year or less, hit $16.6 billion in March. That’s up from $2.4 billion a year earlier.
For years, fixed income provided lackluster returns. But after the Fed pumped up rates, fixed income has gone back in vogue with investors.
That’s because yields are back. At the start of 2022, a 2-year Treasury note yielded less than 1% annually. By the end of the year, it rose to more than 4%.
Consider BondBloxx Investment Management. The fixed income manager has seen increased investor interest in its suite of eight duration-specific U.S. Treasury ETFs. Since launching in September, investors have pumped more than $1.1 billion into the fixed income manager’s Treasury ETFs.
See more: “Don’t Wait for Wider Spreads to Target Fixed Income”
Meaningful Adoption from Clients
“We built our suite of US Treasury ETFs for investors looking to target their duration with precision and flexibility, and it’s rewarding to already see meaningful adoption by our clients,” said Tony Kelly, co-founder of BondBloxx.
These duration-specific Treasury ETFs seek to offer investors a more precise, lower-cost way to get exposure to U.S. Treasury Securities.
The funds track a series of indexes that include duration-constrained subsets of U.S. Treasury bonds with more than $300 billion outstanding. They’re also designed to track indexes that achieve target durations using U.S. Treasury securities, instead of specific maturities or maturity ranges.
In particular, the BondBloxx Bloomberg One Year Target Duration US Treasury ETF (XONE) has recently seen significant inflows. XONE targets U.S. Treasuries with an average duration of roughly one year.
“Investors that want to move up or down the Treasury yield curve in a low cost, efficient manner are increasingly turning to ETFs like XONE,” said VettaFi’s head of research Todd Rosenbluth. “Fixed income ETF usage continues to increase and BondBloxx is a beneficiary of the trend.”
BondBloxx was launched in October 2021 to provide precision ETF exposure for fixed income investors. Kelly co-founded the firm with ETF industry leaders Leland Clemons, Joanna Gallegos, Mark Miller, Brian O’Donnell, and Elya Schwartzman. The team has collectively built and launched over 350 ETFs at firms including BlackRock, JPMorgan, State Street, Northern Trust, and HSBC.
For more news, information, and analysis, visit the Institutional Income Strategies Channel.