Amid Uncertainty, Diversify Income With These Active ETFs

Amid ongoing tariff uncertainties and increasing market volatility, Morgan Stanley suggests bond investors prioritize active selection of sectors and securities. Neuberger Berman offers two ETFs employing active strategies: the Flexible Credit Income ETF (NBFC), a multi-income approach with a 7.10% 30-day SEC yield, and the Total Return Bond ETF (NBTR), a core bond fund with a 5.41% 30-day SEC yield, both designed to navigate volatile fixed income markets.

Analysis

Persistent uncertainty surrounding U.S. tariff policies and anticipated responses from global governments is compelling fixed income investors to prioritize active management strategies, as highlighted by Morgan Stanley. The firm anticipates that fiscal policies will likely exacerbate fundamental dispersion among fixed-income assets and heighten volatility in interest rates and spreads, making diligent sector and security selection crucial. Against this backdrop, Neuberger Berman presents two actively managed ETFs: the Neuberger Berman Flexible Credit Income ETF (NBFC) and the Neuberger Berman Total Return Bond ETF (NBTR). NBFC adopts a multi-income approach, investing in bonds and potentially derivatives like futures and swaps, with a weighted average duration of 5.85 years, over 350 holdings, and a 30-day SEC yield of 7.10% as of April 30. This fund's active strategy is positioned as advantageous in volatile periods, such as the one in April when the Cboe Volatility Index (VIX) surged over 200%. For investors seeking a dedicated bond strategy, NBTR offers an actively managed core bond fund with over 400 holdings, including government, corporate, mortgage-backed, and asset-backed securities, delivering a 30-day SEC yield of 5.41% as of April 30. Both ETFs are designed to adapt to evolving market conditions and exploit yield opportunities through experienced portfolio management.

Key Decisions for Investors

• Given ongoing tariff uncertainties and potential for increased fixed income market volatility, investors should consider allocating to actively managed bond strategies that can adapt security selection and sector exposure.
• For income-focused investors comfortable with a multi-asset credit approach, the Neuberger Berman Flexible Credit Income ETF (NBFC) warrants evaluation due to its 7.10% 30-day SEC yield and ability to utilize derivatives, potentially offering agility in turbulent markets.
• Investors seeking a diversified core bond solution with active oversight to navigate changing conditions might explore the Neuberger Berman Total Return Bond ETF (NBTR), which offers a 5.41% 30-day SEC yield and a broad mix of investment-grade debt and income-generating securities.