Bet on the Resilience of U.S. Consumers With XHYC & XHYD

Despite high inflation, U.S. consumers are still shopping. The Department of Commerce reported that retail sales rose by 0.4% in April from March.

“April’s retail sales numbers speak to the resiliency of the economy,” Natalie Kotlyar, national practice leader of BDO’s retail and consumer products industry told CNN.

For investors interested in high-yield industries that benefit from resilience from U.S. consumers, BondBloxx has two funds worth considering.

The BondBloxx USD High Yield Bond Consumer Cyclicals Sector ETF (XHYC) targets U.S. dollar-denominated, high-yield corporate bonds in the consumer cyclicals sector. XYHC invests in below-investment-grade bonds from issuers in the automotive, leisure, real estate development & management, department stores, and specialty retail subsectors.

 

Meanwhile, the BondBloxx USD High Yield Bond Consumer Non-Cyclicals Sector ETF (XHYD) seeks U.S. dollar-denominated, high-yield corporate bonds in the consumer non-cyclicals sector. XHYD includes investment-grade bonds from issuers in the consumer goods, discount stores, food and drug retail, restaurants, and utilities subsectors.

 

Sector-Specific High Yield Exposure

The two consumer sectors in high yield are currently trading at yield levels around double where they started in 2022.

XHYC and XHYD are two of seven industry sector-specific high-yield bond ETFs that BondBloxx launched in February 2022. The funds offer precise, index-based exposure to the high-yield asset class. Additionally, they allow investors to diversify and manage risk in the industry sector.

“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,” said BondBloxx co-founder Joanna Gallegos on an episode of LOGICLY’s “Coffee Break.” “So, we hope that our products shine a light on that.”

BondBloxx offers a range of ETFs spanning U.S. Treasuries, industry- and credit rating-specific high-yield bonds, and emerging markets bonds.

“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.”