White House Injects Public Transit Industry With $3.7 Billion | ETF Trends

The Biden administration is granting $2.2 billion in coronavirus relief money to 35 financially strapped transit agencies in 18 states. The Associated Press is reporting that the money from the American Rescue Plan would prop up day-to-day operations for public transit systems, including staffing and payroll, as well as cleaning and sanitization to limit the spread of illness in public transportation.

Another $1.5 billion in grants will be made available under President Joe Biden’s infrastructure law — a total of $7.5 billion over five years — for transit agencies to purchase low- or no-emission buses made by U.S. workers and to build bus facilities.

The cash infusion comes as many workers return to offices and the administration looks to promote zero-emission transit. Transit agencies are also looking to boost ridership. Many have cut prices or offered free fares to attract suburban commuters and better serve lower-income communities more dependent on public transportation. Others are adjusting bus and subway routes to offer less service during traditional workday rush-hour periods in favor of more trips at other times of the day for people seeking medical care or traveling to sports and entertainment events.

Transit agencies have until May to apply for the Transportation Department’s grants, which will be awarded by fall. Roughly 5% of the money must also be used for workforce training to help transit workers prepare for the technological change.

Institutional investors seeking high-yield fixed income exposure to the transportation and services sector may want to consider the BondBloxx US High Yield Industrial Sector ETF (NYSE Arca: XHYI), a U.S. high-yield bond fund that, in addition to transportation, targets the basic materials and capital goods sub-sectors. XHYI has an annual expense ratio of 0.35%.

XHYI 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.

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