High yield bonds are living up to their name this year. With yields now at an average of 8.8% — up from 4.4% at the start of the year, according to the ICE BofA US High Yield Index — the $1.5 trillion sector is looking increasingly appealing.
Plus, the yield gap between high yield debt and U.S. Treasuries has widened to five percentage points from three points at the start of 2022, based on the ICE index.
But high yield fixed income is not without risk. Barron’s reported that the ICE index had a total return of -12.6% in 2022 through September 22. However, that is better than the S&P 500’s 20% decline during the same period.
So, for riskier investors who want to take advantage of high yields within their fixed income portfolios, it helps to take a targeted approach. That’s where BondBloxx Investment Management comes in.
Launched in October of 2021 to provide precision ETF exposure for fixed income investors, BondBloxx was co-founded by ETF industry leaders Leland Clemons, Joanna Gallegos, 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.
“Our conversations with investors have reinforced what we already knew – there is significant demand for more targeted fixed income products,” said 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.”
Since February, BondBloxx has launched 19 high yield products, including eight target duration U.S. Treasury ETFs, seven industry sector-specific high yield bond ETFs, three ratings-specific high yield bond ETFs, and one short-duration emerging market bond ETF.
“BondBloxx has continued to launch innovative products since its founding and has expanded the ETF universe with targeted products where there is white space,” said Todd Rosenbluth, head of research at VettaFi. “Their broad range of fixed income funds makes them a firm to watch as the asset category grows.”
For more news, information, and strategy, visit the Institutional Income Strategies Channel.