Core Insights - Active fixed income ETFs have seen significant growth in both number and assets under management (AUM) since the introduction of the ETF rule in 2019, driven by increasing investor interest in fixed income [1] - The VettaFi 2026 Market Outlook Symposium highlighted discussions on active fixed income strategies, featuring insights from leaders at PIMCO and Goldman Sachs Asset Management [2][3] Investment Themes for 2026 - Investors are encouraged to move out of cash, as the Federal Reserve continues to cut rates, potentially bringing yields closer to 3% or 3.5%, making it an opportune time to lock in attractive yields [5][6] - Upgrading core fixed income allocations is recommended, with a focus on active management, particularly in longer-duration bonds [6] - Tax-optimized strategies are also emphasized as a key focus area for investors [6] Fixed Income as a Diversifier - Fixed income is regaining its role as a diversifier, with equities and bonds showing inversely correlated performance [7] - High-quality bonds are highlighted as offering yields of 5%, 6%, and 7%, providing significant opportunities for investors [6][7] Specific Investment Opportunities - Securitized products and high-quality agency-backed mortgages are identified as attractive investment opportunities, offering yields comparable to investment-grade credit [8] - PIMCO is currently underweight in corporate credit, suggesting that there are unique opportunities in the market that differ from traditional expectations [9][10] Active Fixed Income ETF Usage - A survey of panel attendees revealed that 43% use active fixed income as a core allocation, while 28% use it across core and satellite options [10] - PIMCO and Goldman Sachs both offer a variety of active fixed income ETFs, such as the PIMCO Mortgage-Backed Securities Active ETF (PMBS) and the GS Corporate Bond ETF (GIGL), which charge 88 basis points and 29 basis points respectively [11][12]

Core Insights - The fixed income market is experiencing shifts due to recent interest rate cuts by the Federal Reserve, creating new opportunities for advisors and investors [1][2] - Experts anticipate a slowdown in U.S. growth, which historically benefits the bond market [2] - Advisors and investors need to refine their fixed income portfolios to capitalize on valuable opportunities, particularly in the high yield sector, which has shown strong performance recently [3] High Yield Bonds - The BNY Mellon High Yield ETF (BKHY) is positioned as a compelling option for investors seeking high yield exposure [4] - BKHY employs a proprietary credit model to construct a portfolio with a risk profile similar to the Bloomberg US Corporate High Yield Total Return Index, focusing on high-value opportunities while minimizing exposure to lower-quality bonds [5] - The fund's active management allows it to adapt to changing market conditions, which is advantageous in the high yield sector [6] Portfolio Strategy - BKHY's portfolio primarily consists of short- to medium-duration assets, which can benefit from ongoing rate cuts while being less vulnerable to long-term economic concerns [7] - As of November 24, 2025, BKHY has achieved a subsidized 30-day SEC yield of 6.98%, indicating strong performance in the current market environment [7]

Core Insights - The macroeconomic factors impacting the equities market, such as tariffs and interest rate policies, are also influencing fixed income markets, making it an opportune time for active fixed income strategies [1] - Active ETFs have seen a record number of launches in 2025, attracting nearly $340 billion in inflows, surpassing the combined inflows of 2021 to 2023 [2] - Vanguard is expanding its active fixed income offerings, supported by the expertise of the Vanguard Fixed Income Group [3] Active Fixed Income Options - The Vanguard Core Bond ETF (VCRB) offers a low expense ratio of 0.10% and provides diverse fixed income exposure, including U.S. investment-grade bonds and mortgage-backed securities [4] - The Vanguard Core-Plus Bond ETF (VPLS) includes a broader range of income opportunities, such as U.S. Treasuries and emerging market debt [5] - The Vanguard Core Tax-Exempt Bond ETF (VCRM) focuses on municipal debt, providing federal tax-free income [6] Short-Term Investment Strategies - Short-term bond funds can be a viable option for consumers looking to optimize cash for future expenses, alongside traditional instruments like money market accounts and CDs [7] - Vanguard offers three short-term bond ETFs: Vanguard Short Duration Tax-Exempt Bond ETF (VSDM), Vanguard Ultra-Short Bond ETF (VUSB), and Vanguard Short Duration Bond ETF (VSDB), which are low-cost and liquid [8][9] Sector Diversification - The Vanguard Multi-Sector Income Bond ETF (VGMS) is designed for investors seeking to diversify beyond Treasuries, especially during a rate-cutting cycle [11] - The Vanguard Government Securities Active ETF (VGVT) primarily invests in Treasuries but also includes agency-backed securities, with a portfolio composition of 58.7% Treasuries as of September 30 [12] High Yield Opportunities - The Vanguard High-Yield Active ETF (VGHY) is introduced as a new option for investors seeking higher yields, with a competitive expense ratio of 0.22% [14]