BondBloxx Investment Management co-founder Joanna Gallegos said at Exchange 2023 that “the table has been reset for fixed income.”
“2022 was a historic year for both equities and fixed income,” Gallegos told NYSE’s Judy Shaw. “But we’re now at a place where rates are as high as they’ve been in 15 years. Yields in credit spaces have doubled.”
See more: “The Highs (and Lows) of High Yield”
In 2023, “investors can start from a real position of strength in adding fixed income back into their portfolio.” So, they should “look at the cash they have on the sidelines right now and think about re-entering the market.”
Gallegos suggested that investors put that cash into a six-month Treasury fund like the BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF). XHLF is one of eight duration-specific U.S. Treasury ETFs that BondBloxx provides. The fund was yielding over 4% at the time of the interview in February.
“You should be taking advantage of something that hasn’t existed in over a decade in Treasuries,” she said.
For investors thinking about higher quality credit, Gallegos proposed the BondBloxx B-Rated USD High Yield Corporate Bond ETF (XB). XB, which targets single-B high yield bonds, is one of three ratings-specific high yield bond ETFs from BondBloxx.
According to Gallegos, XB “could probably weather some of the storms ahead.”
Gallegos will speak at the VettaFi Fixed Income Symposium on July 24.
For more news, information, and analysis, visit the Institutional Income Strategies Channel.