Investing in fixed income has become increasingly popular in recent years, especially with the rise of exchange-traded funds (ETFs). ETFs provide investors with the opportunity to invest in a broad range of assets without having to own the underlying securities. Meanwhile, fixed income represents 42% of active ETF AUM, and the fixed income class is dominated by invest-grade corporate, and securitized bonds. As 2022 winds down, David Mann, Head of ETF Product & Capital Markets at Principal Global investors, is seeing a surge of interest in active ETFs.
Time-tested, actively managed strategies now available as ETFs are providing investors with the potential to capture alpha, increase diversification and reduce volatility. Its fixed income capability includes invest-grade active and securitized strategies. Duration is key, and the importance of selecting fixed income assets that can balance income and risk makes invest-grade corporate bonds attractive.
Principal Global investors' newly launched ETFs, the Principal invest Grade Corporate Active ETF (PIC) and the Principal Securitized Credit Active ETF (NASDAQ:PSC), provide investors with access to actively managed portfolios of invest grade corporate and securitized bonds, respectively. Both ETFs are designed to capture the yield of the underlying bonds and are actively managed to optimize the return of the ETF relative to its benchmark.
The Principal invest Grade Corporate Active ETF (PIC) seeks to track the performance of the Markit iBoxx USD invest Grade Corporate Index, which is composed of invest grade corporate bonds with maturities of one year or more. The ETF is managed by the Fixed Income team of Principal Global investors and seeks to outperform the index by actively managing the portfolio. The ETF is managed with a focus on duration, credit quality, and sector weightings.
The Principal Securitized Credit Active ETF (NASDAQ:PSC) seeks to track the performance of the Bloomberg Barclays US Securitized Credit Index, which is composed of securitized credit bonds with maturities of one year or more. The ETF is managed by the Fixed Income team of Principal Global investors and seeks to outperform the index by actively managing the portfolio. The ETF is managed with a focus on duration, credit quality, and sector weightings.
Leatherback is another active ETF provider that is filling the void in the active, alternative ETFs space. The firm's actively managed ETF, the Leatherback invest Grade Corporate Bond ETF (LIGC), provides investors with access to a portfolio of invest grade corporate bonds. The ETF is actively managed to capture the yield of the underlying bonds and is managed with a focus on duration, credit quality, and sector weightings.
All invest involve risk, including possible loss of principal. Therefore, it is important for investors to understand their risk tolerance before Investing in any of these active ETFs. investors should consider their overall financial situation, invest goals, and risk tolerance when deciding which ETFs to invest in.
