Core Viewpoint - The article discusses the potential adjustments investors and advisors may consider for their portfolios in 2026, particularly regarding fixed income assets and the implications of interest rate changes by the Federal Reserve [1][2]. Group 1: Interest Rate Expectations - Expectations for a December interest rate cut by the Federal Reserve have diminished, but there is speculation that Fed Chair Jerome Powell may seek new employment in 2026, potentially leading to more accommodative monetary policy [2]. - A significant reduction in interest rates could reduce the attractiveness of short duration bonds [2]. Group 2: Investment Opportunities in Short Duration Bonds - The Neuberger Berman Short Duration Income ETF (NBSD) has shown a year-to-date return of 5.48% and has a weighted average duration of 1.88 years, indicating low sensitivity to Federal Reserve actions [3]. - The NBSD ETF has a 30-day SEC yield of 4.90%, which is notable given its low duration and minimal credit risk, while still benefiting from declining rates [6]. Group 3: Advantages of Short-Term Bonds - Short-term bonds are favored for their ability to generate current income with relatively low risk, making them suitable for many investors' portfolios [5]. - Although longer duration bonds typically provide more income due to higher rate risk, short-term bonds can still play a critical role in providing current income and reducing overall portfolio risk [8]. Group 4: Market Performance Insights - Short-term bonds tend to perform best during periods of declining interest rates and low inflation, although they do not benefit as much from downward trends in interest rates compared to longer-duration bonds [7]. - Over the past decade, short-term bond categories had lower returns but fared better than longer-duration categories during the bond market downturn in 2022 [7].

Core Insights - Fixed income ETFs, particularly Neuberger Berman Total Return Bond ETF (NBTR) and Neuberger Berman Short Duration Income ETF (NBSD), have shown decent performance in 2023, but past performance does not guarantee future results [1][5] - Investors in fixed income need to be agile and adaptable in 2026 due to changing Federal Reserve policies and economic conditions [2][4] Market Outlook - The future of interest rate cuts is uncertain, with inflation remaining stubborn and potential US tariff policies possibly increasing prices in 2026, indicating a shift towards structurally higher inflation [3][6] - The Federal Reserve is not expected to lower rates soon, but there is speculation about potential leadership changes that could influence future rate decisions [4][5] Investment Strategy - A flexible, diversified, and dynamic approach to bond investing is essential moving into 2026, as traditional passive fixed income funds may not perform as well [6][7] - Higher volatility in the fixed income market has created a wider performance gap, emphasizing the need for a global and flexible investment strategy [7]

Core Insights - The ETF industry is experiencing a record year of inflows, particularly in fixed income funds, with actively managed bond ETFs gaining significant attention from advisors and investors [1][2][3] Group 1: Market Trends - Hundreds of billions of dollars have flowed into bond ETFs in the first nine months of 2025, indicating a strong demand for these investment vehicles [3] - The shift towards active fixed income ETFs is expected to be durable, with products like the Neuberger Berman Total Return Bond ETF (NBTR) and the Neuberger Berman Short Duration Income ETF (NBSD) poised for growth [2][4] Group 2: Investment Strategies - Active ETFs such as NBSD and NBTR can effectively mitigate risks, especially in the current environment of fluctuating Federal Reserve interest rate policies [3][4] - As the ETF industry matures, innovation is becoming increasingly important, suggesting that bond funds like NBSD and NBTR may attract more attention as asset allocators seek better access to bonds [5] Group 3: Competitive Landscape - The equity ETF market is perceived as saturated, with many existing products competing primarily on price, which may drive investors towards fixed income and bond markets for new opportunities [6] - NBSD has a strong track record across various interest rate environments, enhancing its appeal despite being relatively new in ETF form [6]

Group 1 - The Federal Open Market Committee (FOMC) is expected to lower interest rates by at least 25 basis points in its upcoming meeting [1] - Dovish moves by the U.S. central bank lead fixed income investors to consider longer-dated bonds, but shorter duration ETFs like Neuberger Berman Short Duration Income ETF (NBSD) remain valuable [2][5] - The NBSD ETF, which has a weighted average duration of 2.08 years, offers a 30-day SEC yield of 5.01%, making it an attractive alternative to cash as interest rates decline [4] Group 2 - Short duration bonds provide potentially higher returns than cash, lower volatility, and liquidity, making them appealing to investors, especially in a declining interest rate environment [5] - Following a significant bond sell-off in 2022, investors are shifting focus to short duration bonds, which offer a safer option during market volatility [6] - Short duration bonds reflect central bank interest rate policies, providing more stability and predictability in yields [7]

Group 1: Market Overview - The job market showed significant weakness in August, with only 22,000 jobs created against expectations of 75,000, marking the first net job loss since December 2020 [3] - Following the weak jobs report, investors shifted towards Treasuries, leading to a sharp decline in Treasury yields, with 2-year yields dropping to a three-year low and 10-year yields falling by 14 basis points [2] - The Federal Reserve is anticipated to cut interest rates by at least a quarter point this fall due to the economic weakening and uncertainty surrounding inflation [2][3] Group 2: Tariff Implications - Recent court rulings deemed the majority of new tariffs illegal, escalating the issue to the Supreme Court, which adds to market uncertainty [4] - If the ruling stands, it could significantly impact markets and bonds, as the U.S. may need to repay collected tariffs, increasing volatility in U.S. bond markets [5] Group 3: Investment Strategies - The Neuberger Berman Short Duration Income ETF (NBSD) aims to provide reliable income with a short-duration investment-grade profile, appealing in volatile market conditions [7] - NBSD invests in a diverse range of sectors and bond types, including both fixed- and floating-rate investment-grade bonds, as well as asset-backed and mortgage-backed securities [8] - The fund's management employs both qualitative and quantitative factors in security selection, focusing on underpriced bonds while maintaining a majority in investment-grade bonds [9]