BondBloxx Rolls Out 3 Corporate Bond Funds

The funds offer precise exposure to corporate BBB bonds.

LucyBrewster310x310
|
Finance Reporter
|
Reviewed by: etf.com Staff
,
Edited by: James Rubin

BondBloxx Investment Management Corporation, the fixed income-focused ETF issuer with $2.7 billion in 20 ETFs, unveiled a suite of new bond funds this week, tapping into investor demand for more niche exposure in the corporate bond market.  

The three funds, which started trading Jan. 25, have maturities ranging from short to long term in the narrow focus of BBB rated corporate bonds. The ETFs include the BondBloxx BBB Rated 1-5 Year Corporate Bond ETF (BBBS), the BondBloxx BBB Rated 5-10 Year Corporate Bond ETF (BBBI), and the BondBloxx BBB Rated 10+ Year Corporate Bond ETF (BBBL). Their expense ratios are all 0.19%, beating the average fixed income ETF fee of 0.35%.  

With the Federal Reserve expected to maintain or lower interest rates in the months ahead, some investors see now as an ideal time to invest in bond-related products. The U.S. central bank raised interest rates to 525 basis points over a more than year-long period to quell high inflation but turned more dovish last fall as prices stabilized. The latest inflation data has offered a few more encouraging signs. 

“The consensus on Wall Street is that interest rates have peaked and that the Fed is going to cut rates later this year, etf.com analyst Sumit Roy said. “There is also a growing belief that the economy will have a ‘soft landing’ and avoid a recession. If those two things are correct, then buying corporate bonds makes sense because rate cuts will put upward pressure on bond prices, and a soft landing will ensure that corporate bond defaults remain relatively low.” 

Fixed Income ETFs Jump

On the most recent episode of etf.com’s Exchange Traded Fridays,Tony Kelly, co-founder of BondBloxx, said he expects assets in fixed income ETFs to jump from 20% of the ETF market to 40%. 

BondBloxx is hoping to differentiate its product from the 656 other ETFs in the fixed income universe by narrowing in on precise corporate bond exposure.  

“Investment grade corporates continue to be an area of focus for investors, and within that universe BBBs offer a unique opportunity for potential outperformance,” said JoAnne Bianco, Investment Strategist at BondBloxx in a statement. “Yet until now, investors were quite limited in their portfolio building options when it came to adding targeted BBB exposures. We’re excited to innovate and solve that issue for investors and advisors by bringing these new funds to market.”  

The largest fixed income ETF is the Vanguard Total Market ETF (BND) with $104.7 billion in assets.  

Contact Lucy Brewster at [email protected].  

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.