BondBloxx Investment Management co-founder Joanna Gallegos said at Exchange 2023 that “the table has been reset for fixed income.”
“2022 was a historic year for both equities and fixed income,” Gallegos told NYSE’s Judy Shaw. “But we’re now at a place where rates are as high as they’ve been in 15 years. Yields in credit spaces have doubled.”
See more: The Highs and Lows of High Yield
In 2023, “investors can start from a real position of strength in adding fixed income back into their portfolio.” So, they should “look at the cash they have on the sidelines right now and think about re-entering the market.”
Gallegos suggested that investors put that cash into a six-month Treasury fund like the BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF ). XHLF is one of eight duration-specific U.S. Treasury ETFs that BondBloxx provides. The fund was yielding over 4% at the time of the interview in February.
“You should be taking advantage of something that hasn’t existed in over a decade in Treasuries,” she said.
For investors thinking about higher quality credit, Gallegos proposed the BondBloxx B-Rated USD High Yield Corporate Bond ETF (XB ). XB, which targets single-B high yield bonds, is one of three ratings-specific high yield bond ETFs from BondBloxx.
According to Gallegos, XB “could probably weather some of the storms ahead.”
Gallegos will speak at the VettaFi Fixed Income Symposium July 24.
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