Chuck Jaffe: One fund, on point for today. The expert to talk about it. This is the ETF of the Week.  Welcome to the ETF of the Week, where we examine new and newsworthy, unique, and intriguing exchange traded funds with Todd Rosenbluth, head of research at VettaFi. And at VettaFi.com, you’ll find all the tools you need to make sure you are at the top of your game on exchange traded funds. Todd Rosenbluth, great to chat with you again! Todd Rosenbluth: It’s great to be back, Chuck! Chuck Jaffe: Your ETF of the Week is… Todd Rosenbluth: The MFS Active Core Bond Plus ETF, MFSB. Chuck Jaffe: MFSB, the MFS Active Core Plus Bond ETF. This is a brand new fund. It’s not even two months old. It’s barely out of the box. But it’s also an actively managed core bond ETF. And the first actively managed ETFs were basically bond ETFs. So, I thought the actively managed Core Bond ETF story had kind of been told. Why is this the ETF of the Week now? Todd Rosenbluth: Well, you talked about new and newsworthy! So MFS has been in the mutual fund world for over 100 years. That’s just hard to imagine, but is true! More than 100 years that this firm has been offering actively managed strategies. It launched its first ETFs, as you mentioned, about two months ago. That’s a milestone worth taking note of and taking a closer look at one of those funds that launched, MFSB. We think this is an appropriate fund to take a closer look at. The fixed income market is somewhat watching what’s happening with the Federal Reserve — that’s on hold. It has not cut interest rates. It just recently had a meeting where no changes were made. It’s quite possible that there are no rate cuts, or hikes for that matter, until the second half or nearly the second half of the year or even the second half of the year. This is why active management can add value. You can have an expert or team of experts help you sort through the universe to understand the opportunities across the credit spectrum, across the interest rate spectrum, to make sure your portfolio is well-suited for the year ahead.  And yet, even though this is a new ETF, it’s just two months old. The team that’s behind this ETF has been running mutual funds for years. And you can go to look them up at Morningstar. But the MFS Total Return Bond Fund has outperformed its category in recent years. So that’s a good sign to us. Old firm, new ETF makes sense in this environment. Chuck Jaffe: It’s worth noting that they got their first ETFs out in 2024, because in 1924, MFS launched the first mutual fund in the United States. It was the Massachusetts Investors Trust. It still exists today, and it is the single oldest fund out there. And again, still, it’s continuous. It’s been there from the very beginning. When it comes to funds like this, a lot of the hot bond shops were pretty quick to adopt ETFs. So you had Pimco when Bill Gross was still there, you had DoubleLine with Jeff Gundlach, etc. When the old-line firm is coming along, is that more a sign that they’re finally getting there? But if you’re going to be buying their funds, just buy them in ETF form? Or is it that they truly bring something different to the game? Todd Rosenbluth: So this is a new ETF entrant, but with a long history of active management — a long history of active management not only in the equity space that you talked about, but in the bond space. Yes, we’ve been seeing more firms enter into the ETF marketplace with their active strategies, and for good reason. We saw active ETFs punching well above their weight in 2024. We think they’re looking strong in 2025. Investors that believe in active management are increasingly turning to the ETF wrapper for the tax efficiency, for the liquidity, the ability to build a broader portfolio that includes index and active-based products. Advisors and investors are embracing it. So, we’re excited that MFS now has this strategy. You’d have to believe in active management. And now this fund comes with a fee that is higher than you’d get for an index-based strategy. You’d have to believe there’s value added in active management, and then the plus. We talked about that. We were talking as much about the core. The plus side of a core-plus bond strategy is that it is not only investment grade, but there are some speculative grade bonds — high yield corporate bonds. The fund has the ability — unlike an index-based product — to invest outside the United States. So there’s lots of different ways to add some additional income, taking on a little bit more risk where management feels it’s prudent. And we think the MFS team is a fund family to take a closer look at. Chuck Jaffe: The expense ratio is higher, but at 34 basis points, it’s not wildly higher. It is cheaper than it would be if you went and bought MFS Total Return, the classic fund that is run by the same team. For you, is a big part of the attraction right now not just the active management, but the idea that you can go towards high yield, etc., because the spreads on high yield are tight, which makes high yields particularly valuable right now? We’ll see what happens with interest rates and whether they hold it. But if you’re trying to goose yields, that’s really where you want to be going right now in a lot of cases. So is that part of the attraction, that this is a fund that is actively managed and willing to go there? Todd Rosenbluth: Yes. I like funds that when there’s actively managed and they have more tools at the portfolio management team’s disposal. Or at least that’s what we’re talking about at this time. If we thought it made sense to hunker down, then you’d perhaps be happier that the fund was Treasury only, as opposed to taking on additional credit risk. So that added flexibility is a positive. Again, I think we talked about it in the past. We do this on a weekly basis. I’m coming up with 52 different ideas. Nobody should build a portfolio using all 52 different strategies. But if you’re looking for a bond ETF from a well-established manager and you believe in active management, this checks many of those boxes, if not all of those boxes. And since you brought it up before, let me come back to it. Thirty-four basis points is really low for active management. Now, it isn’t the cheapest ETF out there. That’s not the goal. You shouldn’t be shorting for a fund just based on expense ratio. You should go beyond that. But the ability to tap into the expertise of a firm with a 100-year history behind it for just 34 basis points is tremendous. It’s really worth folks taking a closer look at it. Chuck Jaffe: And that brings up another thing. Look, we know that ETFs are your book. You know if I’m asking you to give an endorsement on ETFs versus traditional funds, it’s really a softball. And I shouldn’t ask that question, because we know where you’re going to go. But you’ve also always maintained that there was not much reason for anybody to go from the classic traditional mutual fund shares to the ETF version of the same fund and go through potential tax changes and all the rest. So, is this also for somebody out there who has a classic actively managed bond fund, or is in something like MFS Total Return. They’re not necessarily going to make this move, but their kids don’t even consider the old fund. Like, go get the new flavors, go get the better chassis and do that? Is that also part of this, that when you can get good funds on better vehicles, better cost structures, that’s clearly the obvious choice? Todd Rosenbluth: Right. So yes, let me take the second part first and then hopefully come back around to it.  So, if you’re an investor looking to put new money to work, for yourself — or even for, as you mentioned, a younger generation that’s going to be holding on for the longer term — those fee savings are going to add up. The liquidity is a benefit for ETFs as opposed to mutual funds. The tax efficiency that tends to happen in general within an ETF is stronger than a mutual fund — equity or a fixed-income-oriented. People who own the MFS Total Return Bond mutual fund should be happy. When I took a closer look at it, it’s a fund that’s doing well, and it’s well-managed by a team of experienced professionals. Some of those people are behind the MFS Core Plus Bond ETF that we’re talking about today. If you own a fund and you’re happy, then you should just hear that we at VettaFi are confident in the team from MFS. If you don’t own this strategy from MFS, but you’ve heard of them, you should take a closer look at it as you’re building more of an ETF-oriented portfolio. Chuck Jaffe: It’s the MFSB, the MFS Active Core Plus Bond Fund, the ETF of the Week from Todd Rosenbluth at VettaFi. Todd, great stuff. Talk to you again next week. Todd Rosenbluth: I’ll see you next week. Chuck. Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. And yes, I am Chuck Jaffe. And I’d love it if you check out my hour-long weekday show by going to your favorite podcast app, or by searching for it at MoneyLifeShow.com Now, if you’re searching for great information on your mutual funds, or maybe your next ETFs and mutual funds, go to VettaFi.com, where they’ve got all the tools you need to get the information you’re looking for. They’re on X at @Vetta_Fi, and Todd Rosenbluth, their head of research, my guest, he’s on X too, at @ToddRosenbluth. The ETF of the Week is here for you every Thursday. Make sure you don’t miss an episode by following along or by subscribing on your favorite podcast app. We’ll bring you another new or newsworthy, unique, or intriguing ETF next week. And until then, happy investing everybody! For more information, please visit VettaFi.com | ETF Trends.