BondBloxx Investment Management co-founder Joanna Gallegos thinks “that more portfolios are going to be allocated towards fixed income” in 2023, since “yields have historically grown at a rate that we’ve never seen.”
“Bonds have changed in just one year’s time to be incredible contributors to your portfolio return for 2023,” she added.
Appearing on an episode of Logicly’s “Coffee Break,” Gallegos explained that fixed income is looking appealing after we’ve seen the biggest percentage rate of interest rate increase in just one year, and that investors will be taking advantage of the yield and interest that fixed income now provides.
BondBloxx provides sector-specific exposure to high yield fixed income through seven industry sector-specific high yield bond ETFs. According to Gallegos, one sector that’s been doing well within the high yield fixed income space is energy.
“The energy sector in high yield is not like the rest of the broad based high-yield market,” she said. “It’s the most volatile… but right now, it’s had an incredibly interesting 18 months. It actually has been outperforming other sectors in high yield.”
The (XHYE ) seeks to track the investment results of an index composed of U.S. dollar-denominated, high yield corporate bonds in the energy sector. This includes issuers from the exploration & production, gas distribution, oil field equipment & services, and oil refining & marketing subsectors.
“Being able to see a different cut of different areas in fixed income is incredibly important because there aren’t a lot of investors that follow more precise exposures and fixed income,” Gallegos added. “So, we hope that our products shine a light on that.”
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.”
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