With a deal having been made on the debt limit, investors can breathe a sigh of relief knowing that the U.S. won’t default on its debt. And this of course means that Fitch Ratings won’t downgrade the country’s credit rating. Plus, investors can continue to invest in U.S. Treasuries with confidence.
Just before the deal was made, BondBloxx Investment Management co-founder Joanna Gallegos said on CNBC that the firm was recommending clients go a little further out on duration were concerned about the debt ceiling theater. Not necessarily 10- or 20-year Treasuries, but one-to-three-year Treasury exposure.
Gallegos added that she was confident that a deal would be reached in time.
Ultimately, Gallegos was proven correct: the sound and the fury came to signify not all that much. This means investors can invest along any part of the duration curve they want. So, for investors looking to target Treasuries, BondBloxx has eight duration-specific U.S. Treasury ETFs.
Form Six Months to 20 Years
The ETFs track a series of indexes developed by Bloomberg Index Services that include duration-constrained subsets of U.S. Treasury bonds with more than $300 billion outstanding. They’re designed to track indexes that achieve target durations using U.S. Treasury securities, instead of specific maturities or maturity ranges.
The durations are as short as six months, with the BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF ) to 20 years, through the BondBloxx Bloomberg Twenty Year Target Duration US Treasury ETF (XTWY ).
“We built our suite of US Treasury ETFs for investors looking to target their duration with precision and flexibility,” said Tony Kelly, co-founder of BondBloxx.
BondBloxx was launched in October 2021 to provide precision ETF exposure for fixed income investors. Gallegos and Kelly co-founded the firm with ETF industry leaders Leland Clemons, 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.
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