BondBloxx BB Rated USD HY Corp Bd ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's investment process inspires confidence and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in corporate bonds and an underweight in B rated bonds compared with category peers. The team managing the passive strategy earns the strategy an Average People Pillar rating. The strategy's parent firm has some investor-friendly attributes, like overall reasonable fees and high portfolio management retention. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

BondBloxx BB Rated USD HY Corp Bd ETF earns an Above Average Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. The most meaningful contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 100% also supports the rating. Lastly, the process is limited by the size of its portfolio management team, only two portfolio managers.

The investment strategy as stated in the fund's prospectus is: 

The investment seeks to track the investment results of the ICE BofA BB US Cash Pay High Yield Constrained Index composed of BB (or its equivalent) fixed rate U.S. dollar-denominated, high yield corporate bonds.  The fund will invest at least 80% of its net assets in high-yield, below-investment grade bonds denominated in U.S. dollars of corporate issuers, either directly or indirectly (e.g., and through derivatives). It is non-diversified.  

 This strategy's 12-month yield is 6.2%, which is neck-and-neck with its average peer. The portfolio holds assets with a higher average surveyed credit quality of BB, compared with the category average of B. Strategies with lower credit risk can typically withstand market turmoil more effectively. In terms of long-term interest-rate risk, this strategy is on par with peers. The longer a strategy's duration, the more sensitive it is to shifts in interest rates. This fund, with a 3.9-year duration, is expected to gain 3.9% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

Above Average

Process

BondBloxx Investment Management LLC’s team earns An Average People Pillar rating. The main contributor to the rating is the firm's five-year retention rate of 100%. A low cost, with fees that rank in its category's cheapest 20%, also contributes to the rating. Fees detract from net returns, so the team has a lower expense hurdle to overcome. Lastly, the rating is limited by the number of months that the management team has been running this vehicle together. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.

Average

People

Since its inception only two years ago, BondBloxx Investment Management LLC has demonstrated that it can be trusted as much as the next asset manager. As a result, it has an Average Parent Pillar rating. BondBloxx Investment Management LLC currently oversees 25 vehicles, with a total of $2.66 billion under management and a bench of 13 fund managers. BondBloxx Investment Management LLC's management team is composed of mostly veteran managers, averaging 20 years of industry experience. A firm's ability to retain its talent is a crucial indicator of its culture. This has been a strength of BondBloxx Investment Management LLC, which has had lower-than-average manager turnover. 

 BondBloxx Investment Management LLC deserves plaudits for its commitment to low fees for its open-end and exchange-traded funds, which showcases its willingness to prioritize investors. The firm's average net expense ratio across all funds is in the cheapest quintile of firms.  

 To keep an Average rating, BondBloxx Investment Management LLC will be expected to maintain a consistent track record of positive investor experience.

Parent

BondBloxx BB-Rated USD High Yield Corporate Bond ETF

XBB tracks a market value-weighted index that specifically invests in USD-denominated corporate bonds with a credit rating of BB (or its equivalent), based on an average of three main credit rating providers.

BondBloxx CCC-Rated USD High Yield Corporate Bond ETF

High yield bonds rated CCC are continuing to bring in strong results. Recent insight from BondBloxx noted that high yield bonds brought in a positive performance in March, led by junk bonds rated BB and CCC.

Bonds Rated CCC Continue Show of Success

On Wednesday, Federal Reserve Chair Jerome Powell said that while interest rate cuts won't happen just yet, he believes cuts could be on the horizon. Powell added that he does not think the U.S. is heading toward a recession in the near term.

Amid Rate Speculation, Consider High Yield Corporate Bonds

BondBloxx B-Rated USD High Yield Corporate Bond ETF

The outlook for U.S. high yield fixed income may be more constructive than investors realize. High yield is well-known for being riskier than other segments in the fixed income market; however, strong corporate fundamentals have strengthened the integrity of the asset class.

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After a year when advisors were relatively cautious about taking on credit risk, sentiment seems to be shifting. In 2023, the most popular fixed income ETF was the iShares 20+ Year Treasury ETF (TLT).

Chart of the Week: High Yield Gaining Traction With Advisors

BondBloxx USD High Yield Bond Consumer Cyclicals Sector ETF

U.S. high yield has rebounded in the first half of 2023. This comes after experiencing the worst total return year — 2022 — since the great financial crisis.

When Allocating to High Yield, Choose Your Entry Points With Precision

High yield continues to live up to its name. In fact, it was the only major fixed income asset class to generate positive performance in August.

High Yield Continues to Bring the High Returns

Issuers of high yield bonds remain resilient going into the second half of 2023, with their balance sheets still well-positioned. And according to BondBloxx, the credit quality breakdown within high yield remains better than before previous downcycles.

Within High Yield, Credit Rating Category Positioning Matters

Despite concerns about an economic hard landing and a spate of corporate debt downgrades around the world, junk bonds are performing admirably this year. The widely observed Markit iBoxx USD Liquid High Yield Index is higher by 5.87% year-to-date, as of August 10.

Examine XBB for Junk Bonds Sweetness

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Bull vs. Bear: Are High Yield ETFs Worth the Higher Risk?

The prospect for income generation in high yield ETFs has increased significantly with the past year's run-up in yields. But when targeting high yield, investors should be shrewd and selective when picking their entry points.

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High yield is really living up to its name. An Ice Data Services index shows that yields on so-called domestic junk bonds have risen to nearly 8.6% from a mid-August low of 7.4%, reflecting a substantial price drop.

High Yield Is Living Up to its Name

U.S. high yield bonds seeing their biggest one-month rally in a decade suggests that the economy won't fall into a recession. Amid the Federal Reserve's plan to fight inflation with aggressive interest rate hikes, so-called junk bonds gained 5.9% in July and have also been gaining in August, according to Bloomberg.

High Yield Bonds See Biggest One-Month Gain in 10 Years

As fears of a recession diminish and yields fall, companies are once again looking to issue bonds — and not just investment-grade bonds.

High Yield Corporate Bond Sales Bigger in 1 Day Than in All of July

Institutional investors such as pension funds and endowments are eyeing more distressed debt opportunities, anticipating that a recession will allow them to profit from the debt of struggling companies.

Bracing for Recession, Institutional Investors Eye Distressed Debt

With stock markets continuing to be volatile and analysts fearing that a recession could be looming over the horizon, high yield corporate bonds offering weightier yields than they have in recent years may provide investors with better downside protection than stocks, according to Nuveen.

Corporate High Yield Debt May Provide Better Downside Protection Than Stocks

BondBloxx Investment Management announced the launch of three new ETFs, which begin trading today on NYSE Arca. The ETFs track ratings-specific sub-indexes of the ICE BofA US Cash Pay High Yield Constrained Index.

BondBloxx Launches 3 New High Yield Corporate Bond ETFs

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The three funds range from B to CCC credit ratings.

News for BondBloxx BB-Rated USD High Yield Corporate Bond ETF ETF (XBB)