Group 1 - The inverse relationship between bond prices and yields is crucial for fixed income investors, particularly in the context of Federal Reserve actions [1][2] - The Neuberger Berman Flexible Credit Income ETF (NBFC) is positioned to benefit from Fed easing, as it includes both investment-grade and high-yield corporate debt [2][4] - Options-adjusted spreads (OAS) provide insights into risk and volatility in the credit markets, highlighting the differences between investment-grade and high-yield bonds [3][5] Group 2 - Junk bonds are particularly sensitive to interest rate changes, and their performance this year reflects expectations of Fed easing [4][6] - The volatility in high-yield corporate debt is generally higher than in investment-grade corporates, which justifies the higher yields investors receive [6][7] - The management of NBFC can help mitigate concerns regarding volatility, as the team actively manages the fund to navigate market conditions [7][8]

Core Insights - The bond market, particularly high-yield and investment-grade corporate debt, has performed well in 2023, with the two largest ETFs in these categories up an average of 7% year-to-date as of September 26 [1] Group 1: Investment Opportunities - The Neuberger Berman Flexible Credit Income ETF (NBFC) is highlighted as an attractive option for income investors, especially with expectations of further interest rate cuts by the Federal Reserve [2] - NBFC, which launched in June 2024, is actively managed and holds a mix of investment-grade and junk debt, with a heavier emphasis on the latter while still maintaining exposure to higher quality corporates [3][4] - The ETF boasts a 30-day SEC yield of 6.39%, which is considered impressive, and is supported by the higher-than-average yields currently available in the investment-grade bond market [4][5] Group 2: Yield Analysis - Investment-grade corporate bonds are yielding between 4.25% to 5.50%, which is near the top of their range for the last 15 years, indicating a favorable environment for bond investors [5] - The inverse relationship between bond prices and yields suggests that higher yields may indicate potential for price appreciation, making NBFC's elevated yield appealing [6] - Current yields on investment-grade corporate bonds may serve as indicators of future total returns, making them a viable option for investors concerned about interest rate uncertainties [7][8]

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].