Core Insights - The prevailing sentiment among advisors and investors is shifting towards investment-grade corporate bonds and high-yield corporates, with 48% and 38% respectively considering them the most attractive segments of the bond market [1] Investment Grade Corporate Bonds - Investment-grade corporate bonds are favored for their consistent income and moderate risk profile, with solid recent performance; for example, the Vanguard Intermediate-Term Corporate Bond ETF (VCIT) was up 8.9% year-to-date through December 9, outperforming the iShares Core Aggregate Bond ETF (AGG) which gained 6.8% [2] - The VCIT has $58 billion in assets, offers a 4.8% yield, and has an average duration of 6.0 years, with 44% in A-rated and 50% in BBB-rated securities [3] High-Yield Corporate Bonds - There is notable confidence among advisors in high-yield bonds, with the iShares Broad USD High Yield Corporate Bond ETF (USHY) returning 8.0% for the year as of December 9 and offering a 6.8% yield; this $25 billion ETF primarily holds 54% BB-rated and 34% B-rated securities, with an average duration of 3.0 years [5] - The positive outlook for high-yield bonds is reinforced by a supportive technical backdrop, with credit quality holding firm and default rates below long-term averages, making it an attractive opportunity for fixed income allocators [6] Active High-Yield ETFs - The supply of actively managed high-yield ETFs is increasing, with the JPMorgan Active High Yield ETF (JPHY) managing $2.1 billion, having launched with $2 billion in June 2025; it has a different exposure profile compared to USHY, with 6% in BBB-rated securities and a net expense ratio of 0.45% [7] - The Vanguard High-Yield Active ETF (VGHY), launched in September, currently has $106 million in assets and offers a competitive fee of 0.22% [8]

Core Viewpoint - iShares Preferred and Income Securities ETF (PFF) offers a 6.4% yield through investments in U.S. preferred stocks and income-producing securities, with a focus on providing monthly income from a diversified portfolio [1][4]. Fund Overview - PFF has $14.2 billion in assets and has been operational since 2007, providing consistent monthly distributions [1]. - The fund charges a 0.45% expense ratio and does not employ leverage [1]. Income Generation - PFF generates its yield by collecting fixed dividend payments from preferred stocks, which are distributed monthly to shareholders [5]. - Monthly distributions have varied between $0.16 and $0.18 per share in 2025, totaling approximately $2.06 annually [6]. Distribution Characteristics - The fund has maintained consistent monthly payments since inception, although the amounts can fluctuate quarterly due to the varying payment schedules of underlying securities [6]. - PFF's low portfolio turnover of 20% indicates stable holdings, which helps reduce transaction costs [9]. Risks and Sensitivities - The primary risk to PFF's dividend sustainability is its sensitivity to interest rates, as rising rates typically lead to falling prices for preferred stocks [7]. - The Federal Reserve's monetary policy directly impacts the valuations of preferred stocks and the attractiveness of new issuances [7]. Performance Insights - PFF's total return history highlights the importance of considering both yield and price movement, with the fund's price showing stability despite fluctuations in individual high-yield securities [8]. - Preferred stocks generally underperform during periods of rising rates and credit stress, even though they provide higher current income compared to investment-grade bonds [9]. Alternative Investment - For investors seeking similar income with different risk characteristics, the SPDR Portfolio High Yield Bond ETF (SPHY) offers a 6.8% yield through corporate high-yield bonds, with a significantly lower expense ratio of 0.05% [10].

Core Viewpoint - State Street Investment Management is expanding its ETF business by targeting advisors and retail investors, highlighted by the launch of a new low-cost ultra-short bond ETF, the SPDR Portfolio Ultra-Short T-Bill ETF (SPTU) [1][2] Group 1: ETF Launch and Features - The SPDR Portfolio Ultra-Short T-Bill ETF (SPTU) began trading, providing exposure to U.S. Treasury bills with maturities between one and twelve months [1] - SPTU is priced at five basis points, making it one of the lowest-cost ETFs in the Treasury bond category, cheaper than the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) which has a fee of 0.14% [1] Group 2: Market Position and Performance - State Street has been a leader in the short-term fixed income ETF market, with the BIL managing $42 billion and adding over $5 billion in net inflows in 2025 [1] - The SPDR Portfolio ETF suite has accumulated over $323 billion in assets since its inception in 2017, with significant inflows in 2025, including $24 billion for the SPDR Portfolio S&P 500 (SPLG) [3] Group 3: Investor Appeal and Trends - The appeal of low-cost ETFs is underscored by the growing interest in fixed income ETFs, which have attracted over $300 billion in new money in 2025 as investors seek bond market access [4] - The launch of SPTU is positioned as a flexible funding solution for institutional investors, aiding in income generation and risk mitigation [2]