BondBloxx, IR+M Roll Out New Tax-Smart ETFs For Investors

Zinger Key Points

These funds are meant to simplify the tax complexities for investors without investing in bonds.
The approach looks beyond the conventional municipal bond, offering a means to possibly add after-tax returns.
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BondBloxx and Income Research + Management (IR+M) expanded its suite of tax-aware fixed-income ETFs with two new funds: the BondBloxx IR+M Tax-Aware Intermediate Duration ETF TXXI and the BondBloxx IR+M Tax-Aware ETF for Massachusetts Residents TAXM.

These funds are meant to simplify the tax complexities for investors without investing in bonds. This growth comes on the heels of the success of its first partnership ETF, the BondBloxx IR+M Tax-Aware Short Duration ETF TAXX, which marks a year today.

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TAXX has performed better than the Bloomberg Municipal 1-3 Year Index by 1.03% since it started, as of Feb. 28. TAXX has a current tax-equivalent yield of 5.46% and a 30-day SEC yield of 3.51%, which qualifies it as a solid option for investors seeking to maximize their after-tax returns.

While TAXX is exclusively about short-term bonds, TXXI and TAXM focus on intermediate-term bonds with durations of four to eight years. This provides investors with more choices for structuring their portfolios. TAXM, for instance, is specifically designed for Massachusetts residents, with state-specific tax benefits. These funds represent a more advanced method of fixed-income investing.

The approach looks beyond the conventional municipal bond, offering a means to possibly add after-tax returns. The funds can be used by investors to supplement or even substitute their core U.S. bond holdings, with a choice between short and intermediate-duration exposure.

“Since launching TAXX, we've had numerous conversations with advisors who aren't just looking to the strategy as a municipal bond replacement, but who have been actively allocating to the strategy as part of their core bond holdings," said Tony Kelly, co-founder of BondBloxx. “TXXI is positioned to become a key component of the intermediate sleeve of a core bond portfolio.”

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