Michigan Municipal Employees' Retirement System filed a holdings report for the quarter ended June 30 that showed shares of all three BondBloxx Investment Management exchange-traded funds that were released in late May.
The roughly $15 billion Lansing-based retirement system held shares of the BondBloxx BB Rated USD High Yield Corporate Bond ETF, the BondBloxx B Rated USD High Yield Corporate Bond ETF and the BondBloxx CCC Rated USD High Yield Corporate Bond ETF, according to the 13F holdings report MERS filed with the Securities and Exchange Commission on July 29.
A MERS spokeswoman declined to comment regarding the 13F report.
Of the three ETFs, MERS' biggest investment was in the BondBloxx BB Rated USD High Yield Corporate Bond ETF. MERS held 996,434 shares of that fund valued at $38.5 million, the report showed. That's noteworthy considering the ETF had 1.1 million shares outstanding and net assets of $44.8 million as of Monday, according to BondBloxx's website.
"Anytime you see really strong early traction, it's exciting," said Leland Clemons, one of the founders of BondBloxx, which was incorporated last year and in February launched its first product suite of seven ETFs, which are designed to offer precise, index-based exposure to industry sectors within the U.S. high-yield bond asset class. "We've got a lot of work to do, and we'd like to think we're just getting started."
After launching the seven initial ETFs in February followed by the three high-yield credit quality ETFs in May, BondBloxx in late June launched the BondBloxx JP Morgan USD Emerging Markets 1-10 Year Bond ETF, Mr. Clemons said.
BondBloxx in June also filed to offer its first suite of U.S. Treasury ETFs, which will which offer targeted exposure to key maturities such as 10-year U.S. Treasuries for example "as opposed to existing Treasury ETFs, which target a maturity range," he said.
"There's no other issuer that is focused 100% on fixed-income ETFs," Mr. Clemons said, although he acknowledged that large asset managers such as BlackRock and State Street Global Advisors "do have fixed-income ETFs as part of their broader ETF lineup."
MERS deciding to invest in the three high-yield credit quality ETFs was not "a total surprise," given that BondBloxx, in deciding which products it wants to build, has "dozens and dozens of conversations with different institutional portfolio managers and traders to understand what's valuable and what's needed in marketplace," he said.
Before founding BondBloxx, Mr. Clemons was head of fixed income and derivatives for Tradeweb Europe. From 2005 to 2019, he served in a variety of leadership roles in BlackRock's ETF and indexing business, he said.
BondBloxx's 11 ETFs currently have assets under management totaling just under $300 million.
"We feel pretty good about that for five months in," Mr. Clemons said.
