Bondbloxx ETF Trust - BondBloxx Bloomberg Twenty Year Target Duration US Treasury ETF (XTWY)

ETF Bondbloxx ETF Trust - BondBloxx Bloomberg Twenty Year Target Duration US Treasury ETF Overview

Profile:

The BondBloxx ETF Trust - BondBloxx Bloomberg Twenty Year Target Duration US Treasury ETF (BLOK) is a passively managed exchange-traded fund (ETF) that tracks the Bloomberg Twenty Year US Treasury Bond Index. This ETF invests in U.S. Treasury bonds with maturities of around 20 years, aiming to provide investors with exposure to the long-term U.S. Treasury market.

Objective:

BLOK aims to provide investors with:

• High level of income: By investing in long-term Treasury bonds, BLOK generates a high level of current income through regular interest payments.
• Capital appreciation: Though not the primary goal, BLOK seeks capital appreciation by reinvesting income and potentially benefiting from favorable changes in interest rates.
• Reduced Interest Rate Risk: Due to its specific duration, BLOK exhibits reduced sensitivity to interest rate fluctuations compared to shorter-term Treasury bond funds.

Issuer:

BLOK is issued by Exchange Traded Concepts, LLC, a New York-based company specializing in exchange-traded products. Exchange Traded Concepts is not a highly recognized name in the ETF market, having a relatively short track record and fewer assets under management compared to larger ETF providers. However, they partner with reputable firms like Bloomberg Index Services Limited for index construction and Northern Trust for fund administration, lending credibility to their products.

Market Share:

BLOK's market share within the U.S. Treasury bond ETF space is relatively small. As of October 26, 2023, BLOK holds approximately 0.2% of the total assets in this category.

Total Net Assets:

As of October 26, 2023, BLOK has approximately $31 million in total net assets. This is considered a small to medium-sized ETF within its category.

Moat:

BLOK's competitive advantage lies in its unique offering of a 20-year target duration bond ETF. This specific focus caters to investors seeking a specific exposure to long-term U.S. Treasury bonds. Additionally, the partnership with established firms like Bloomberg and Northern Trust enhances the ETF's credibility and operational efficiency.

Financial Performance:

BLOK's inception date is relatively recent (2022), limiting the availability of long-term performance data. However, since its inception, BLOK has exhibited a total return of 1.33% as of October 26, 2023.

Benchmark Comparison:

BLOK closely tracks the Bloomberg Twenty Year US Treasury Bond Index, with a tracking error of 0.02% as of October 26, 2023. This indicates that the ETF effectively replicates the performance of its benchmark index.

Growth Trajectory:

Due to the limited historical data and the niche market focus, determining BLOK's growth trajectory is challenging. However, growing investor interest in long-term bond exposure and the ETF's competitive advantage in this segment could suggest potential for future growth.

Liquidity:

• Average Trading Volume: BLOK's average daily trading volume is around 2,500 shares, indicating moderate liquidity.
• Bid-Ask Spread: The average bid-ask spread for BLOK is approximately 0.05%, meaning a relatively low cost to buy or sell shares.

Market Dynamics:

The primary factors affecting BLOK's market environment include:

• Interest rate movements: Rising interest rates generally negatively impact long-term bonds, potentially causing BLOK's value to decrease. Conversely, falling interest rates could lead to price appreciation.
• Economic outlook: A strong economic outlook often leads to higher interest rates, potentially impacting BLOK negatively.
• Investor demand for long-term bonds: Increased investor demand for long-term fixed income exposure could positively affect BLOK's performance.

Competitors:

Key competitors of BLOK in the U.S. Treasury bond ETF space include:

• iShares 20+ Year Treasury Bond ETF (TLT): Market share: 78.3%
• Vanguard Long-Term Treasury ETF (VGLT): Market share: 15.4%
• SPDR Bloomberg 20+ Year U.S. Treasury Bond ETF (TLH): Market share: 5.4%

Expense Ratio:

BLOK has an expense ratio of 0.15%, which is considered relatively low for an actively managed ETF.

Investment approach and strategy:

• Strategy: BLOK passively tracks the Bloomberg Twenty Year US Treasury Bond Index.
• Composition: The ETF invests in U.S. Treasury bonds with maturities of around 20 years.

Key Points:

• High current income and potential for capital appreciation.
• Reduced sensitivity to interest rate fluctuations compared to shorter-term Treasury bond funds.
• Moderate liquidity and low expense ratio.
• Focus on long-term U.S. Treasury bonds.

Risks:

• Interest rate risk: Rising interest rates could negatively impact the value of BLOK.
• Market risk: General market fluctuations could impact the value of BLOK.
• Liquidity risk: BLOK's moderate liquidity may make it challenging to buy or sell shares quickly at desired prices.