Considering your options in fixed income? With the rate cut dam broken, the fixed income landscape may be poised for further changes. Clients may want to move off of cash, while advisors may be looking at new options to shore up yield gains. Finally, with many considering tax-loss harvesting, it may be time to make the move from mutual funds to ETFs. Together, those factors speak to the case for considering an active fixed income ETF like the T. Rowe Price Ultra Short-Term Bond ETF (TBUX ), which is hitting some important marks.
See more: What Comes After Rate Cuts? Here’s the Next Move
TBUX recently passed $200 million in AUM. The active fixed income ETF also hit its three-year ETF milestone as of Sept. 28, an important threshold at which point many advisors add strategies to their lists. The fund, then, may be offering an intriguing entry point for curious advisors and investors.
The strategy actively invests for only 17 basis points, a low fee for active ETFs. With that ETF wrapper, it offers a more tax-efficient vehicle compared to mutual funds. At the same time, TBUX’s active approach can help it stand out relative to passive fixed income funds. Active management can prove a powerful tool when considering the complicated bond space, such as rolling bonds or dealing with tight yield spreads.
In a short or ultra-short strategy, particularly, an active fixed income ETF approach can stand out. TBUX looks to provide an effective duration of 1.5 years or less. The strategy aims to provide a high level of income via corporate and government debt securities. TBUX may be a compelling approach from either side of the conversation. It could help investors looking to move cash into the market off the sidelines or to provide a lower volatility option to those looking to reduce duration risk.
TBUX currently offers a 5.15% 30-day SEC standardized yield, per T. Rowe Price data. With fixed income volatility potentially rising on the horizon, the fund’s multisector, short-term approach and active flexibility can make it a potent option to watch.
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