Fixed income has been making a comeback this year after a historically bad year in 2022. In particular, investors are increasingly turning to high-yield bond funds.
High-yield bonds currently are benefiting from elevated coupon income and are less risky than equities. Speaking with Bob Pisani on CNBC’s “Halftime Report,” BondBloxx Investment Management co-founder Joanna Gallegos said that “there are some sectors in high yield that have really healthy cash flows right now,” citing energy and financials as sectors that are doing particularly well within high yield.
“During the pandemic, these… issuers had a chance to refinance their debts, so their balance sheets are pretty strong,” she added. “The yields in high yield are really compelling.”
See more: “BondBloxx’s Gallegos: Bonds Are Back Because Yields Are Back”
BondBloxx recently saw an uptick in investor capital going into several of its seven industry sector-specific high yield bond ETFs, including the BondBloxx USD High Yield Bond Industrial Sector ETF (XHYI), the BondBloxx USD High Yield Bond Financial & REIT Sector ETF (XHYF), the BondBloxx USD High Yield Bond Consumer Cyclicals Sector ETF (XHYC), and the BondBloxx USD High Yield Bond Energy Sector ETF (XHYE).
XHYI targets basic materials, capital goods, transportation, and services sub-sectors. XHYF, meanwhile, targets banking, financial services, insurance, and REIT sub-sectors.
XHYC targets the consumer cyclicals sector, including the automotive, leisure, real estate development & management, department stores, and specialty retail sub-sectors. XHYE targets the energy sector including the exploration & production, gas distribution, oil field equipment & services, and oil refining, and marketing sub-sectors.
Launched in October of 2021 to provide precision ETF exposure for fixed income investors, Gallegos co-founded BondBloxx with ETF industry leaders Leland Clemons, 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.
“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 analysis, visit the Institutional Income Strategies Channel.
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