It Pays to Be Flexible With Corporate Bonds

Core Viewpoint - The Neuberger Berman Flexible Credit Income ETF (NBFC) offers a refreshing alternative to traditional high-yield corporate bond ETFs, appealing to advisors and investors due to its active management and flexible investment strategy [2][4]. Group 1: ETF Characteristics - NBFC has a 30-day SEC yield of 6.39%, which is attractive, especially following recent interest rate cuts by the Federal Reserve [3]. - The ETF allocates over 40% of its portfolio to standard junk corporates, with additional investments in floating rate notes and collateralized loan obligations (CLOs), enhancing income potential while reducing interest rate risk [6]. - NBFC includes nearly 13% exposure to emerging markets debt, which tends to perform well in a declining interest rate environment [7]. Group 2: Investment Strategy - The ETF's duration is 3.36 years, and its weighted average maturity is 4.81 years, indicating a focus on managing interest rate risk [6]. - NBFC's portfolio also features an 8.1% allocation to investment-grade corporate bonds and exposure to hybrid and securitized debt, which are uncommon in traditional passive junk bond ETFs [8]. - The ETF's holdings range from AAA to CCC ratings, showcasing a breadth of investment opportunities that older competing products typically lack [8].