ETF custodian and administrator Brown Brothers Harriman & Co and fixed income ETF issuer BondBloxx Investment Management Corporation have announced their strategic partnership. BBH will provide custody, administration, accounting, and transfer agency for BondBloxx’s upcoming initial product launch.
“ETFs provide investors easy access to fixed income exposure in a low cost and tax efficient structure.” says Shawn McNinch, Head of ETF Servicing at BBH. “We are proud to partner with BondBloxx’s highly experienced leadership team on this innovative milestone.”
BondBloxx brings together a team of ETF industry pioneers, led by founders Leland Clemons, Joanna Gallegos, Elya Schwartzman, Mark Miller, Brian O’Donnell and Tony Kelly, who have collectively launched over 350 ETFs, including some of the largest bond ETFs on the market today, at leading firms including BlackRock, J.P. Morgan, Goldman Sachs, State Street, Northern Trust and HSBC.
BBH’s most recent Global ETF Survey identified a significant growth opportunity for fixed income ETFs within the larger ETF market, with 66 per cent of investors planning to increase their fixed income ETF allocations, and 42 per cent saying they had bought fixed income ETFs during periods of heightened volatility where the ETF offered transparency and liquidity compared to the individual bonds. Bond ETFs currently hold USD1.25 trillion in assets under management, less than 20 per cent of total ETF industry assets.
“The bond market is evolving, with innovations in price transparency and electronic trading that have set the table for a step-change in the evolution of fixed income ETFs,” says BondBloxx co-founder Joanna Gallegos. “BBH has demonstrated their commitment to innovation and supporting the fixed income ETF space, and we are excited to establish a strategic partnership that will harness our collective knowledge and expertise.”
The initial BondBloxx funds, which track sector-specific subsets of the ICE BofA US Cash Pay High Yield Constrained Index, are the first ETFs that will enable investors to access industry sectors across the US high yield market, the firm writes.