How High Yield Fixed Income Can Help With Liquidity Management

High yield fixed income bond ETFs can be a good way for investors to manage their liquidity, according to BondBloxx Investment Management co-founder Joanna Gallegos. Speaking on the “Alpha Exchange” podcast, Gallegos told host Dean Curnutt that BondBloxx would “love to move the industry forward” in this regard.

For example, if a portfolio manager wanted to buy “a list of names… it’s going to take you some time to get into those specific issues or get into those specific names,” she said. But by buying into sector-specific ETFs, they “could at least get the exposure of the sector that [they’re] looking for if the names are in those particular sectors.”

Then from a liquidity management standpoint, the portfolio manager could put their “investible cash… into the exposure that reflects generally the view [they’re] trying to express on a single bond basis.”

Gallegos co-founded BondBloxx with fellow ETF industry leaders Leland Clemons, Joanna, Tony Kelly, 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.

The founders of BondBloxx felt that fixed income investors were being underserved by the dearth of available bond products on the market. So, in February, the company launched its first suite of ETFs: seven industry sector-specific high-yield bond ETFs.

“We wanted to build a business that was 100% focused on fixed income and making those products available to bond investors,” said Gallegos.

Gallegos added: “In markets like we just experienced, you probably would have loved to have more precision … in your portfolio a lot earlier than this year, but we’re glad they’re here. So, as people come back into high yield, they can build up their exposure more to the way they invest today or the way they see the world.”

Since launching those seven industry sector-specific high-yield bond ETFs in February, BondBloxx has launched 12 additional high-yield products, including eight target-duration U.S. Treasury ETFsthree ratings-specific high-yield bond ETFs, and one short-duration emerging market bond ETF.

Gallegos said that the company is looking to continue expanding. In addition to “moving into IG [investment-grade]” and “exploring more in emerging markets,” the firm plans “on launching about 20 products a year for the next three years.”

“There’s so much that we want to get to,” she added.

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