BondBloxx Bloomberg ThreeYrTrgDurUSTrETF’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 lowest 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 underweight position in AA rated bonds and cash 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 affordable fees and continuity among portfolio managers. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

BondBloxx Bloomberg ThreeYrTrgDurUSTrETF 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 important driver of the rating is that this fund tracks an index. Historical data, like 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 contributes to the process. 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 Bloomberg US Treasury 3 Year Duration Index composed of U.S. Treasury securities with a duration between 2 and 4 years.  Under normal circumstances, the fund will invest at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in a portfolio of U.S. Treasury securities that collectively have an average duration of approximately 3 years, either directly or indirectly (e.g., and through derivatives). The index is comprised of certain U.S. Treasury notes and bonds that are included in the Bloomberg US Treasury Index. It is non-diversified.  

 This strategy's 12-month yield is 4.0%, higher than its average peer's 3.7%. Higher yields tend to indicate higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio has a higher average surveyed credit quality of AAA, compared with the typical peers' AA, and it holds no non-investment-grade assets, similar to its peers' average. Strategies that take on less credit risk can often shoulder more-adverse market conditions. 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 3.0-year duration, is expected to gain 3.0% 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 receives An Average People Pillar rating. The primary 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 reduce net returns, so the managers have 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

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