BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF)

Overview

The fund described focuses on investing primarily in U.S. Treasury securities, dedicating at least 80% of its net assets towards this goal. This investment strategy also includes the potential for leveraging borrowing for the purpose of enhancing investment outcomes. The targeted portfolio consists of securities that, as a collective, maintain an average duration of approximately 6 months. This strategic choice suggests a conservative investment posture, aiming to mitigate risks associated with longer-duration treasury assets. The fund’s approach explicitly allows for investment in these securities either directly or indirectly, the latter potentially involving the use of derivatives. A significant characteristic of this fund is its non-diversified status, indicating that it might concentrate its investments more narrowly than diversified funds. This can lead to increased exposure to the performance of fewer issuers and potentially greater volatility or risk for investors.

Products and Services

The key offerings of the fund center on U.S. Treasury securities investment, with a distinct focus on short-duration assets and the strategy around them, including:

• Direct U.S. Treasury Securities Investment: The fund primarily invests in U.S. Treasury securities that match its criteria for average duration, directly purchasing these securities to hold in its portfolio. This direct investment approach seeks to provide investors with the security and stability associated with Treasury securities, which are backed by the full faith and credit of the U.S. government.
• Indirect Investment via Derivatives: Besides direct acquisitions, the fund employs derivatives to gain exposure to U.S. Treasury securities indirectly. This method may include futures, options, or swap contracts linked to the performance of these securities or related indexes. Using derivatives, the fund aims to enhance returns, manage risk, or gain investment exposure more efficiently than direct investing alone might allow.
• Utilization of Borrowings for Investment Purposes: The fund has the capability to leverage borrowing to amplify its investment strategy. This involves borrowing funds to increase the amount of capital available for investment in U.S. Treasury securities or derivatives linked to them. While this can potentially increase the fund’s returns, it also introduces a higher level of risk, including the possibility of increased volatility and loss of principal.