Build Asset Management’s new bond allocation fund seeks to mitigate risk while looking for upside potential


Build Asset Management today launched the BUILD Bond Innovation ETF (NYSE Arca: BFIX), a bond allocation fund designed for a modern global environment characterized by low interest rates and limited economic growth. The fund seeks to outperform traditional bond strategies in the event of persistently low yields and/or rising prices in equity markets.

BFIX typically holds 90% to 95% of its holdings in higher quality fixed income assets, with the aim of providing long-term downside risk management. The fund seeks to maintain a moderate duration profile and requires superior credit quality in its bond portfolios.

BFIX is going on the attack with the rest of its assets in an actively managed options overlay on US large-cap stocks, seeking managed risk exposure to their price performance. The combination of this advanced options strategy and a conservative fixed income profile is designed to mitigate risk during general market downside events while looking for upside potential.

“We designed BFIX with the voice of the American retiree and traditional bond investor in mind who often wonder how they can achieve meaningful returns with a defensive mindset,” said John Ruth, co-founder and CEO of Build Asset Management. “We expect BFIX to serve as a timely addition to a well-diversified portfolio for years to come.”

“Over the past forty years, bonds have been on a relentless bull run – diversifying portfolios, producing income and reducing volatility. However, due to the steady decline in yields, bond allocations have seen a steady reduction in their contributions to overall portfolio returns,” said Matt Dines, co-founder and CIO of Build Asset Management. “Bond investors currently face a risk-return conundrum, and BFIX seeks to address the issue of low yields without taking on more duration risk or lowering credit quality.”

Dines added: “Our approach combines active fixed income management, an equity options overlay and a rules-based trading framework that keeps the balance of fixed income and options in line with risk measures. The strategy aims to provide significant total return potential with risk-adjusted measures of return favored over the strategy’s benchmark.

BFIX has an expense ratio of 0.5%.

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