Investors Looked to High Yield Before Fed’s Decision

So, prior to the Fed announcing its decision on Wednesday to raise interest rates by another 75 basis points, ETF investors put more money into high-yield fixed income funds. For example, data from Bloomberg show that investors put nearly $1 billion into the SPDR Bloomberg High Yield Bond ETF (JNK A-) on Friday, the fund’s biggest daily inflow since 2007.

“Risk assets of all stripes have been climbing as optimism builds around the Fed dialing back the pace of rate hikes after it delivers an expected fourth-straight, 75-basis-point rate increase Wednesday,” according to Bloomberg. “The renewed appetite for risk has boosted equities and sent billions into credit ETFs despite lackluster corporate earnings.”

The Fed continued its aggressive campaign to fight inflation by raising rates by three-quarters of a point for the fourth time in a row on Wednesday. However, the U.S. central bank said in its policy statement that officials were aware that interest rate moves take time to fully work, signaling that it could slow rate hikes soon.

Launched in October of 2021 to provide precision ETF exposure for fixed income investors, BondBloxx Investment Management co-founded by ETF industry leaders Leland Clemons, Joanna Gallegos, 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.

“Our conversations with investors have reinforced what we already knew – there is significant demand for more targeted fixed income products,” said Kelly. “Our initial product suites aim to create a full toolkit for high-yield investors looking to implement their specific views on the market, and we anticipate extending this approach to other fixed income asset classes.”

Since February, BondBloxx has launched 19 high-yield products, including eight target-duration U.S. Treasury ETFs, seven industry sector-specific high-yield bond ETFs, three ratings-specific high-yield bond ETFs, and one short-duration emerging market bond ETF.

“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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