Anyone doubting that a firm whose exchange-traded funds are less than a year old could have 12 of them rank among a multibillion-dollar pension fund's holdings should check out the Municipal Employees' Retirement System of Michigan's latest 13F holdings report.
Twelve ETFs from BondBloxx Investment Management Corp., which launched its first ETFs in February, are listed among MERS' holdings for the quarter ended Sept. 30, according to the roughly $13 billion retirement system's most recent 13F, filed Nov. 14.
According to the 13F, the dollar value of MERS' investment across the 12 BondBloxx ETFs totaled about $400 million. That was up from three BondBloxx ETFs with assets totaling about $53 million as reflected in MERS' 13F report for the quarter ended June 30.
While BondBloxx is a new firm, it has "an extremely deep team" with decades of ETF industry experience, said Paul Van Gilder, a senior investment officer and portfolio manager at Lansing-based MERS.
Collectively, the BondBloxx team has experience working at a variety of major ETF issuers "where they launched hundreds of ETFs," Mr. Van Gilder said in an email. The team's "extensive industry experience," together with the transparency and liquidity of the ETF structure, "allowed MERS to become comfortable with BondBloxx as an investment manager," he said.
MERS continues to hold shares of the 12 BondBloxx ETFs and views them as "long-term holds," Mr. Van Gilder said in a follow-up interview.
"In addition to using ETFs to implement our asset allocation, we also use them to build active portfolios that seek to outperform their respective benchmarks in different asset classes, and that's really what makes us different," he said. "A lot of institutions will use ETFs to hold for a short period of time or just to make things a little bit more efficient, but we use models to build active portfolios out of ETFs."
About 42% of the pension fund's total assets are invested in ETFs, Mr. Van Gilder said.