BondBloxx Investment Management recently zipped past the $2 billion milestone for assets under management, and recent regulatory filings show the Michigan Municipal Employees' Retirement System, Lansing, has provided a lot of the gas.
MERS' 13F holdings report filed with the Securities and Exchange Commission for the quarter ended June 30 showed it owned shares of the same 12 BondBloxx ETFs reflected in its 13F filing for the quarter ended March 31. However, MERS' report for the second quarter, filed Aug. 3, reflected a total of about 15.6 million shares valued at $712 million across those 12 ETFs, up from roughly 11.3 million shares valued at $502 million reflected in the report for the first quarter.
"We're grateful to our clients for making BondBloxx one of the fastest growing investment management firms, because we focus on helping investors navigate the bond markets with greater confidence and precision," said Brian O'Donnell, BondBloxx co-founder, in an Aug. 3 news release announcing that the firm had topped $2 billion in AUM, a milestone that came shortly after it passed the $1 billion AUM mark in April.
Mr. O'Donnell was one of six ETF industry veterans who founded BondBloxx, a provider of precision fixed-income ETFs that launched its first ETFs in February 2022. Like Mr. O'Donnell, each of them worked at BlackRock at some point in their careers.
Founder Leland Clemons is named as an inventor on an ETF-related U.S. patent, developed during his time at BlackRock, according to a biography on BondBloxx's website. Biographies for some of the firm's co-founders also mention ETF-related patent involvement. For example, Co-founder Joanna Gallegos is listed as an inventor "on multiple ETF-related patents," her bio says.
While MERS' latest 13F showed the number of shares it held in 10 of the BondBloxx ETFs as unchanged from the prior report, MERS significantly boosted its holdings in two funds — the BondBloxx Bloomberg Six Month Target Duration U.S. Treasury ETF, known by the ticker XHLF, and the BondBloxx Bloomberg One Year Target Duration U.S. Treasury ETF, known by the ticker XONE — during the quarter ended June 30, the filings showed.
For example, MERS held 4.5 million shares of the BondBloxx Bloomberg One Year Target Duration U.S. Treasury ETF valued at about $224 million, its most recent 13F filing showed, up from 1.2 million shares valued at $61 million as reflected in its filing for the quarter ended March 31.
In an Aug. 4 email exchange, Paul Van Gilder, senior investment officer and portfolio manager at MERS, said MERS' holdings in BondBloxx ETFs were unchanged from June 30. Mr. Van Gilder also noted that MERS had increased its holdings in XHLF and XONE during the second quarter.
"MERS increased its overall fixed income allocation in the second quarter as interest rates rose," he said. "As a result, MERS' holdings of U.S. Treasury ETFs increased in aggregate in the second quarter."
Mr. Van Gilder said MERS uses a model to actively manage its interest rate duration and yield curve positioning in its U.S. Treasury portfolio.
"Due (to) the continued historic inversion in the U.S. Treasury yield curve, at the margin, MERS sold longer maturity U.S. Treasury ETFs towards the end of the second quarter and replaced them with ETFs that target the short end of the yield curve such as XONE and XHLF from BondBloxx as well as TUA from Simplify Asset Management," he said, referring to the Simplify Short Term Treasury Futures Strategy ETF by its ticker symbol.
As of March 31, MERS had $14.5 billion in total assets, which included $11.2 billion in defined benefit assets.
