Now may be the moment to increase portfolio allocation in corporate bond ETFs. With the U.S. economy remaining resilient, corporate bonds have continued to provide immense potential for both yield and returns. The higher credit rating also helps these bonds mitigate more potential risk than high-yield alternatives.
Recently, JoAnne Bianco, CFA, Investment Strategist at BondBloxx Investment Management, joined a VettaFi Webcast to discuss the merits of corporate bond ETFs. During the webcast, Bianco highlighted BBB-rated corporate bonds as an attractive option for investors seeking income.
“BBB corporate fundamentals remain very strong. They’re supported by very strong earnings, ample interest coverage ratios, manageable debt levels, and those BBB companies are very comfortably rated in the BBB category right now,” added Bianco.
Investors can utilize BBB-rated corporate bonds for strong yield potential. Bianco highlighted that BBB bond yields are near 13-level highs, along with coupon income that provides the potential for further outperformance.
“BBBs have generated a long history of outperformance versus these other categories in the investment grade universe, and we think conditions are such that this will continue, and all of these positive attributes come with extremely low default experience for BBBs,” assessed Bianco.
Investment Options
The BondBloxx BBB Rated 1-5 Year Corporate Bond ETF (BBBS ) can help investors harness the litany of benefits within BBB-rated bond investing. The fund primarily invests in BBB-rated corporate bonds with remaining maturities between one and five years. As of May 31st, 2024, the average maturity for assets within BBBS was nearly three years.
Fund flows indicate that more and more investors are choosing to opt for BondBloxx’s investment strategy. As of June 14th, 2024, BBBS has seen over $39 million in net flows over a single month.
Click here to watch the full VettaFi webcast on corporate bond ETFs, featuring JoAnne Bianco and VettaFi’s Lara Crigger.
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