Core Insights - Record demand and new launches have characterized a strong year for fixed income in 2025, with expectations for continued growth into 2026 as the Federal Reserve eases monetary policy [1] - The recent rate-cutting cycle suggests that investors should optimize their portfolios for income extraction, with active management being a key strategy [2] Active vs. Passive Management - Active ETFs provide flexibility compared to passive ETFs, allowing portfolio managers to adjust holdings based on market conditions, making them suitable for various investment objectives [3] - Active management is particularly beneficial in the complex bond market, enabling tailored strategies for core exposure and maximum income [3] Investment Options - Vanguard offers two core exposure options: the Vanguard Core-Plus Bond ETF (VPLS) and the Vanguard Core Tax-Exempt Bond ETF (VCRM), which provide diverse exposure to U.S. Treasuries, mortgage-backed securities, and municipal debt [4][5] - The Vanguard High-Yield Active ETF (VGHY) is introduced as a high-yield muni solution, allowing investors to access high yields without resorting to risky corporate bonds [6][7] Fund Characteristics - VGHY is noted for its active strategy in the high-yield muni market, addressing the complexities and risks associated with municipal bonds [7] - All mentioned active funds feature low expense ratios and are supported by the Vanguard Fixed Income Group, which has expertise in navigating bond markets [7]

Core Viewpoint - Tortoise Capital Advisors is launching the Tortoise Nuclear Renaissance ETF (TNUK) to capitalize on a significant shift in global power markets towards nuclear energy, driven by policy changes and increasing demand for reliable power sources [1][9] Group 1: Policy Developments - The reconciliation bill establishing a nuclear power production tax credit has stabilized electricity prices from nuclear plants, while a 2025 executive order has reinforced government support for domestic nuclear development and supply chains [2] - The combination of these policies has transformed nuclear energy from a debated concept into a viable investment theme [2] Group 2: Demand Dynamics - Domestic electricity demand is experiencing growth for the first time in 20 years, driven by factors such as AI-driven data center demand and overall electrification, necessitating reliable baseload power, which nuclear energy can provide [3] Group 3: Investment Strategy - TNUK aims to provide diversified exposure across the nuclear value chain, including utilities, operators, equipment manufacturers, and service providers, rather than focusing solely on uranium miners [4] - The fund's strategy includes limiting direct commodity exposure to reduce volatility, as operators and reactor vendors typically exhibit lower volatility compared to upstream segments [5][6] Group 4: Active Management - Active management is a key component of TNUK's strategy, allowing the fund to adapt to changing policy signals, market sentiment, and project timelines, which is crucial in the highly regulated nuclear sector [7] - This flexibility enables the fund to reposition its portfolio to take advantage of prevailing market conditions and manage sentiment risk [7] Group 5: Long-term Outlook - The primary risks to the nuclear renaissance narrative include potential reversals in policy support or significant changes in electricity demand; however, TNUK is positioned for long-term investments due to its active management approach [8]

Core Insights - The fixed income market is complex and influenced by various factors such as interest rate policy, tariffs, and geopolitical tensions, making active management essential [2] - MFS Investment Management utilizes the expertise of its portfolio managers to navigate the intricacies of the fixed income market [3] Active Management Approach - MFS employs a diverse range of fixed income solutions that focus on intentional and prudent risk budgeting and allocation [4] - The firm's structured approach involves intensive communication and information sharing among specialized portfolio management, research, and trading teams [5] Investment Options - MFS offers active alternatives in fixed income, notably the MFS Active Core Plus Bond ETF (MFSB) and the MFS Active Intermediate Muni Bond ETF (MFSM) [6] - MFSB employs a primarily investment-grade bond strategy that integrates macro, bottom-up, and technical perspectives for value addition [7] - MFSM focuses on exploiting inefficiencies in municipal credit markets through active sector, quality, and security selection, benefiting from federal tax-free income and strong fundamentals [8] Cost Efficiency - Both MFSB and MFSM feature cost-effective expense ratios of 34 basis points [9]

Core Insights - The MFS Market Insights team suggests that mid-cap ETFs present attractive investment opportunities, particularly in the current market environment [1][2]. Market Conditions - Favorable conditions for small- and mid-cap equities include Federal Reserve rate cuts, reduced tariff headwinds, deregulation, and looser fiscal policy [2]. - Mid-cap equities are highlighted as having a stronger opportunity set compared to small-cap equities at this time [2]. Investment Preferences - The MFS team prefers mid-cap stocks over small-caps due to their more attractive valuations, better access to capital, and superior profitability [3]. - Mid-caps are expected to benefit significantly from deregulation, as they face a higher regulatory burden than both small and large-cap stocks [3]. Active Management Strategy - Given the volatile and headline-driven nature of factors affecting mid-caps, an actively managed approach is recommended for mid-cap exposure [3]. - Actively managed funds provide more flexibility and leverage the expertise of experienced portfolio teams [3]. Fund Highlight - The MFS Active Mid Cap ETF (MMID) is designed to enhance exposure to mid-caps through active management, focusing on quality and franchise durability [4]. - The fund employs various metrics for security selection, with a strong emphasis on cash flow-based methodologies to identify stocks with higher growth potential [5]. Overall Strategy - The strategy combines the benefits of active management with a flexible approach to identify compelling mid-cap investment opportunities [6]. - In a market where mid-caps may outperform, funds like MMID could significantly impact investment portfolios [6].

Group 1 - The exchange-traded fund (ETF) industry is experiencing a record year, with assets surpassing $1 trillion, driven significantly by active managers [1] - Active ETFs represent 80% of year-to-date launches, with assets under management increasing by 38%, compared to a 6% growth for passive ETFs [2] - New ETF launches are evenly distributed between fixed income and equities [2] Group 2 - Average assets under management for funds aged two to three years are approximately $120 million, while newer funds average around $40 million [4] - Active management is seen as valuable in navigating market volatility, with a focus on stock dispersion leading to both significant winners and losers [10]

Core Insights - The exchange-traded fund (ETF) industry is experiencing a record year, with assets surpassing $1 trillion, largely driven by active managers [1][2] - Active ETFs represent 80% of year-to-date launches, with assets under management increasing by 38%, compared to a 6% growth for passive ETFs [2] - BlackRock anticipates continued growth in the ETF market through 2026, emphasizing the importance of active management in navigating market volatility [3][4] Industry Growth - Active ETFs are leading innovation and inflows in the ETF market, confirming trends observed over the past several years [1] - The balance of new ETF launches includes both fixed income and equities, indicating a diverse investment landscape [2] - Average assets under management for funds aged two to three years are approximately $120 million, while newer funds average around $40 million [2] Market Outlook - BlackRock's U.S. head of equity ETFs expresses optimism for the ETF market, highlighting the potential for active management to enhance investor returns amid market dispersion [4]

Core Insights - The U.S. bond market has shown resilience and record-breaking activity in 2025, with the Bloomberg US Aggregate Bond Index returning approximately 7.1% year to date, highlighting the importance of fixed income in investment portfolios [1][10] Bond ETF Market Performance - Bond ETFs captured about one-third of the nearly $1 trillion that flowed into all ETFs in 2025, indicating a significant increase in investor interest, particularly in passively managed ETFs [2][10] - The performance of bond ETFs was influenced by attractive starting yields due to the Federal Reserve's rate cuts totaling 175 basis points since September 2024, which left yields relatively high [6][10] - Market volatility and demand for liquidity during uncertain periods, such as tariff-driven uncertainty, enhanced the appeal of bond ETFs as they provided intraday pricing and liquidity [7] - Actively managed bond ETFs experienced explosive growth, capturing over $100 billion in flows, which accounted for 40% of all fixed income ETF flows as of September 2025 [8] - The normalization of the yield curve attracted significant capital into intermediate and long-term bond ETFs, as investors sought to lock in higher yields [9] 2026 Outlook for Bond ETFs - The outlook for bond ETFs in 2026 is cautiously optimistic, driven by expected interest rate cuts that typically boost bond prices, creating opportunities for income and diversification [11] - Persistent volatility due to inflation and uneven growth suggests that flexible, active management strategies will be favored to navigate credit risk and shifting rates [11] - A well-constructed actively managed portfolio of intermediate maturity bonds may offer capital appreciation and inflation-beating returns in 2026 [12] Recommended Bond ETFs for 2026 - Schwab Core Bond ETF (SCCR) has assets of $1.07 billion, gained 6.2% year to date, and charges 16 basis points in fees [14] - Vanguard Core Bond ETF (VCRB) has assets of $4.8 billion, gained 7.4% year to date, and charges 10 basis points in fees [15] - JPMorgan Active Bond ETF (JBND) has assets of $4.7 billion, surged 8% year to date, and charges 25 basis points in fees [16]

Core Insights - The integration of artificial intelligence (AI) and the energy sector presents significant investment opportunities as AI adoption increases electricity demand [1][2][3] - The energy sector's demand-supply dynamics are favorable for investment, particularly as the digital economy grows and power demand exceeds supply [2][3] - Active management strategies, such as those offered by MFS, can effectively capture the upside from the intersection of AI and energy [4][5][6] Investment Opportunities - The energy sector is expected to benefit from the substantial electricity requirements of AI technologies, leading to various investment opportunities [2][3] - MFS offers a range of active exchange-traded funds (ETFs) that focus on capturing developments in AI and energy, with different strategies but shared principles [4][5] - Active management allows for flexibility in fund exposure, enabling a tilt towards sectors like energy and AI, as demonstrated by specific allocations in MFS ETFs [5][6] Market Conditions - Current market uncertainties, including interest rates and geopolitical tensions, highlight the importance of allocating to actively managed funds [6] - The MFS portfolio management team brings an average of 26 years of industry experience, enhancing the selection process for fund holdings [6]

Core Viewpoint - Janus Henderson Investors aims to assist clients in achieving their long-term financial goals through active management, emphasizing the importance of translating ideas into action and building partnerships for optimal client outcomes [1] Group 1: Company Overview - Janus Henderson Investors was formed in 2017 from the merger of Janus Capital Group and Henderson Global Investors [1] - The company promotes a collaborative team approach among its investment managers, allowing them to utilize strategies best suited to their expertise [1] Group 2: Investment Philosophy - The company’s investment philosophy is centered around active management, which is not only a strategy but also a commitment to empowering clients in making informed investment and business decisions [1] - The "Knowledge. Shared" ethos reflects the company's dedication to fostering dialogue across the business [1]

Core Viewpoint - Fidelity's bond ETF lineup, while smaller than some competitors, offers strategic options for investors looking to capitalize on the improved bond market environment heading into 2026 [1][3]. Group 1: Bond Market Environment - The fixed income market has seen a resurgence, with yields of 4% or greater available across various points on the yield curve, and inflation is now contained, allowing for a more favorable investment climate [2]. - The bond market is recovering from a challenging period, including a poor performance in 2022, and is now positioned to be a more integral part of traditional asset allocation strategies [1][2]. Group 2: Fidelity's Bond ETFs - Fidelity currently offers 13 bond ETFs, providing a range of options for investors to navigate the current economic landscape [3]. - The Fidelity Total Bond ETF (FBND) provides broad exposure to the total bond market, including both investment-grade and junk bonds, with minimal exposure to non-investment-grade and non-U.S. bonds [5][6]. - The Fidelity Enhanced Yield ETF (FDHY) focuses on the junk bond sector, employing a factor-based approach to select bonds with optimal value and quality characteristics, which may benefit from a healthy U.S. economy and stable credit spreads [10][11]. - The Fidelity Tactical Bond ETF (FTBD) combines features of both FBND and FDHY, covering all areas of the fixed-income market while allowing for tactical rotation based on valuation and quality assessments [12][13]. Group 3: Future Outlook - The bond market in 2026 is expected to be influenced by various economic factors, including growth, inflation, and labor market conditions, making a strategic approach to fixed income essential [7]. - Active management in bond funds is anticipated to yield better results as central banks approach the end of their rate-cutting cycles, shifting the focus from yield capture to security selection [14].