BondBloxx registers a 0.22% core-plus bond ETF, and two funds still not for sale
The core-plus fund may be offered now, but it has not started investing. Fees and tickers are still blank on the AI-debt and hybrid filings, which cannot be sold for at least 75 days.
Key takeaways
On Tuesday, BondBloxx ETF Trust registered the BondBloxx Core Plus ETF, BBLX, and filed two active strategies that cannot be sold for at least 75 days. Each filing says it registers one new series and relates only to that series.
Post-effective amendment No. 85, accepted at 5:24 p.m. Eastern time on Tuesday, elects to become effective immediately. The prospectus is dated Oct. 21. It says the fund had not commenced investment operations, and that the shares will be offered as soon as practicable after effectiveness. The proposed listing is NYSE Arca. An effective registration is not a first trade.
A 0.22% fee on a new J.P. Morgan index
BBLX would track the J.P. Morgan GABI USD Liquid Plus Index. The prospectus says the index draws from the J.P. Morgan Global Aggregate Bond Index, a broad benchmark of government, credit, securitized and government-related bonds, and then screens those bonds for eligibility. J.P. Morgan's Sept. 15 methodology note says the index was created in September, with history backfilled to Dec. 31, 2014.
The filing says the strategy is referred to as "core plus" because, in addition to a core portfolio of investment-grade debt, the adviser normally invests a portion in below-investment-grade bonds. Under normal circumstances the fund would put at least 80% of net assets into the index's securities.
As of Sept. 30, the prospectus says, eligible classes included Treasuries, investment-grade and high-yield corporate bonds, agency mortgage-backed securities, emerging-market sovereign and corporate bonds, collateralized loan obligations, asset-backed securities, taxable municipal bonds, and agency securities. BondBloxx Investment Management Corp. is the adviser. Northern Trust Investments manages the portion of the fund allocated to mortgage-backed securities.
The fee table puts the management fee, and the total annual operating expense, at 0.22%. Other expenses are estimated at zero because the adviser pays the fund's operating expenses, other than the management fee and a few items the fund still bears, including interest, taxes and brokerage.
The iShares Core Universal USD Bond ETF, IUSB, charges 0.06% and held $48.8 billion as of Oct. 13, according to iShares. It tracks the Bloomberg U.S. Universal Index.
The Vanguard Core-Plus Bond Index ETF, BNDP, charges 0.05% and tracks the Bloomberg U.S. Universal Float Adjusted Index. Vanguard's June 30 fact sheet describes that index as dollar taxable bonds rated investment-grade or high-yield, and put BNDP's assets at $128 million. Neither fund tracks the J.P. Morgan index created in September.
Defiance listed an AI-bond fund the same day
The BondBloxx AI Infrastructure Debt ETF is still an incomplete prospectus. The ticker, the exchange and the fee are blank. It would be actively managed and would seek a high level of current income. At least 80% of net assets would go into dollar debt of companies the sub-adviser treats as AI infrastructure, including data-center owners, hyperscalers, power and connectivity firms, semiconductor makers, and the contractors that build the sites. It could buy any credit quality, including leveraged loans, high-yield bonds and asset-backed securities, and it could put up to 20% of net assets in non-dollar instruments and non-U.S. issuers. Macquarie Asset Management Credit Advisers US would be the sub-adviser.
Defiance said Tuesday it had launched the Defiance AI Infrastructure Bond ETF, AIBN, on NYSE Arca, at a 0.41% expense ratio. Its Oct. 18 prospectus says the fund tracks the MarketVector US Hyperscalers and AI Bonds Index. The shares traded Tuesday. BondBloxx's version cannot be sold yet, and its fee has not been set.
ProShares Trust filed on Sept. 21 for the ProShares AI Hyperscaler Bond ETF, which would track the VettaFi AI Hyperscaler Bond Index. The filing says the index provider currently identifies Microsoft, Alphabet, Oracle, Amazon and Meta as the hyperscalers. It also says each bond in the index was rated investment grade as of Aug. 31. The ticker and the fee are blank.
A hybrid fund, with the fee still blank
The BondBloxx Hybrid ETF would seek current income and long-term total return, with at least 80% of net assets in hybrid securities. The filing defines those as instruments that sit behind ordinary debt and ahead of common stock, and that typically pay a fixed, floating or fixed-to-floating dividend or distribution.
The list includes preferred stock, trust preferreds, subordinated and junior subordinated notes, and contingent capital, including the Additional Tier 1 securities banks issue. There is no limit on below-investment-grade securities, and the fund could put up to 25% of net assets in non-dollar instruments and non-U.S. issuers, emerging markets included. The filing does not name a sub-adviser.
The iShares Preferred and Income Securities ETF, PFF, tracks an index of U.S. preferred and hybrid securities, charges 0.45%, and held $12 billion as of Oct. 16, according to iShares. The JPMorgan Preferred and Income Securities ETF, JPRF, is active in preferreds, contingent convertibles and corporate hybrids. J.P. Morgan's Sept. 30 fact sheet put assets at $2.23 billion and net expenses at 0.55%, against a gross 0.61%.
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