Want US Energy Exposure? XHYE Provides

Russia’s invasion of Ukraine has not just led to oil prices soaring above $100 a barrel, but also to traders of crude oil rejecting barrels that come from Russia. This response from traders means that sanctions have disrupted energy markets more than expected, Reuters is reporting. Moscow is one of the world’s largest exporters of oil.

While the White House has said that oil sales are not the target of sanctions, President Joe Biden has indicated that the U.S. could block Russian oil if Russia continues its aggression against Ukraine. Some lawmakers are pressing for an outright ban on Russian imports.

Daniel Yergin, vice chairman of IHS Markit, recently said that Russia’s invasion of Ukraine may have kicked off an energy market disruption on a scale not seen since the 1970s. “This is going to be a really big disruption in terms of logistics, and people are going to be scrambling for barrels,” Yergin said. “This is a supply crisis. It’s a logistics crisis. It’s a payment crisis, and this could well be on the scale of the 1970s.”

The volatility in the sector, lowered supply, and increased demand will of course impact the U.S.-based energy industry in a big way. Institutional investors seeking high-yield fixed income exposure to the sector may want to consider the BondBloxx US High Yield Energy Sector ETF (NYSE Arca: XHYE). The U.S. high-yield bond fund targets the energy sector, including the exploration & production, gas distribution, oil field equipment & services, and oil refining & marketing sub-sectors. XHYE has an annual expense ratio of 0.35%.

XHYE is one of seven new U.S. high-yield bond ETFs that BondBloxx Investment Management launched in February. The funds offer precise, index-based exposure to the high-yield asset class and allow investors the opportunity to diversify and manage risk to the industry sector.

The funds are passively managed and track rules-based sub-indexes of the ICE BofA US Cash Pay High Yield Constrained Index.

BondBloxx was founded by ETF industry leaders Leland Clemons, Joanna Gallegos, Elya Schwartzman, Mark Miller, Brian O’Donnell, and Tony Kelly. The team has collectively built and launched over 350 ETFs at firms including BlackRock, JPMorgan, State Street, Northern Trust, and HSBC.

“Our conversations with investors have reinforced what we already knew – there is significant demand for more targeted fixed income products,” said BondBloxx co-founder Tony Kelly. “Our initial product suites aim to create a full toolkit for high yield investors looking to implement their specific views on the market, and we anticipate extending this approach to other fixed income asset classes.”

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