BondBloxx unveils precision duration Treasury ETFs

Fixed income ETF specialist BondBloxx Investment Management has unveiled an industry-first suite of US Treasury ETFs delivering precise duration exposures.

Listed on NYSE Arca, the suite consists of eight funds targeting portfolio durations of six months and one, two, three, five, seven, ten, and twenty years.

The ETFs are linked to indices developed by Bloomberg that consist of duration-constrained subsets of US Treasury bonds with over $300 billion outstanding.

Each index is constructed by creating two buckets of US Treasuries comprising bonds with durations directly on either side of that index’s target duration. For example, the index targeting a two-year duration creates one bucket comprising bonds with durations between one and two years and another bucket comprising bonds with durations between two and three years.

Bonds within each bucket are weighted by market value outstanding. The two buckets are then weighted so as to deliver the index’s precise duration exposure.

JoAnne Bianco, BondBloxx Client Portfolio Manager, said: “In today’s rapidly changing interest rate environment, key priorities for portfolio managers and investors are earning higher yields on strategic cash positions, precisely managing duration risk, and having effective collateral tools. BondBloxx Target Duration US Treasury ETFs may help investors in all these areas, with the potential benefits of being lower cost, transparent, liquid, and tax efficient.”

Tony Kelly, co-Founder of BondBloxx Investment Management, added: “At BondBloxx, we’re committed to building innovative fixed income tools for the markets of today and tomorrow. These new ETFs, which we believe finally make it possible for investors to truly manage their duration exposure with precision, are an exciting and potentially valuable addition to that investor toolkit.”

The ETFs, along with their expense ratios, are outlined below:

BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF US); 0.03%
BondBloxx Bloomberg One Year Target Duration US Treasury ETF (XONE US); 0.03%
BondBloxx Bloomberg Two Year Target Duration US Treasury ETF (XTWO US); 0.05%
BondBloxx Bloomberg Three Year Target Duration US Treasury ETF (XTRE US); 0.05%
BondBloxx Bloomberg Five Year Target Duration US Treasury ETF (XFIV US); 0.05%
BondBloxx Bloomberg Seven Year Target Duration US Treasury ETF (XSVN US); 0.05%
BondBloxx Bloomberg Ten Year Target Duration US Treasury ETF (XTEN US); 0.075%
BondBloxx Bloomberg Twenty Year Target Duration US Treasury ETF (XTWY US); 0.125%

BondBloxx made its debut in February by introducing a suite of ETFs providing exposure to high yield corporate bonds while diversifying and managing risk according to industry exposure. The firm has also launched a trio of funds targeting specific credit buckets within the high yield corporate bond segment, while most recently it introduced an emerging markets government bond fund targeting debt with average lives under ten years.