2025 is just weeks away, and with it comes the opportunity to refresh investor portfolios. While many investors are used to moving in and out of “satellite” ETFs all year in the core and satellite investing model, the end of the year can offer the opportunity to swap core strategies, too. In fixed income, specifically, the moment may call for a change as the rate cut regime continues apace. With that in mind, it may be time to consider an active core fixed income ETF as a core option.
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Many investors, when looking to build a core and satellite investing model, sift through passive fixed income funds to fill the core role. An active approach therein, however, could improve on a passive approach. Holding the Bloomberg U.S. Aggregate — a key passive bond index — as a core may be straightforward, but active funds can outperform. An active core fixed income ETF can adapt to events, scrutinize bond issuer’s credit quality details, and, importantly, deal with rolling bond expiration dates more efficiently.
Active Core Fixed Income ETF AVIG
The Avantis Core Fixed Income ETF (AVIG ) charges 15 basis points to actively invest in both U.S. and non-U.S. issued bonds. The ETF can invest in debt issued by both corporations and governments as well as their associated agencies. Leaning on an analytical framework assessing income and capital appreciation, AVIG’s managers then categorize the portfolio’s universe into groups based on credit rating, duration, currency, and more. Further, the active core fixed income ETF looks to create a weighted average maturity within two years of the weighted average of the Agg.
With that relatively low fee for an active fund, AVIG could offer a compelling case. With the lagging impact of rate cuts still unfolding, swapping into a low-fee active core bond ETF like AVIG could be worth considering.
For more news, information, and analysis, visit the Core Strategies Channel.
