Ratcheting geopolitical tensions in the Middle East mid-June add another layer of risk in 2025. In a tumultuous year defined by ongoing volatility, uncertainty, and risks, actively managed strategies appear well-positioned. The T. Rowe Price QM U.S. Bond ETF (TAGG ) combines the familiar risk profile of the Bloomberg US Aggregate Bond Index while offering differentiated exposures, a boon for core bond portfolios.
TAGG seeks to outperform the Bloomberg U.S. Aggregate Bond Index. It does so while offering a similar risk profile as the benchmark, making it a notable addition to core bond portfolios. TAGG invests in U.S. government debt, investment-grade bond corporate bonds, asset-backed securities, municipal bonds, and other bonds.
A similar risk profile to the benchmark and an affordable management fee make TAGG a strong contender for advisors and investors revisiting their core bond portfolio exposures this year. The fund has brought in approximately $1.25 billion in net flows YTD as of June 12, 2025 according to FactSet data.
See also: Active Core Bond ETF TAGG Surpasses $1 Billion AUM
The strategy combines quantitative models and fundamental analysis when constructing the portfolio. The overall portfolio offers similar characteristics to the AGG. However, individual security and sector weights may differ. Current top exposures for TAGG included U.S. Treasuries (39.99%), mortgage (26.01%), and corporate (25.70%) as of 05/31/2025. For comparison, the AGG’s top sectors are Treasuries (45.42%), MBS pass-through (24.12%), and industrial (14.23%) as of June 12, 2025.
In maintaining a similar profile to the benchmark, TAGG offers intermediate to long-term maturity exposure. The weighted average duration of TAGG was 6.00 years as of May 31, 2025. The weighted average maturity was 8.39 years over the same period. TAGG also invests in futures, including interest rate futures, as well as forwards and swaps to maintain the desired duration profile.
TAGG invests primarily in the U.S. — 94.30% of the portfolio was U.S. bonds as of the end of May. However, the fund also invests internationally, with incremental exposures to Canada, the U.K., Spain, and more.
A competitive management fee of just 0.08% with the benefits of an actively managed strategy make TAGG worth consideration this year.
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