As active ETFs’ role in the asset management landscape continues to grow, active fixed income ETFs in particular have gathered significant new interest. That has led to new launches and significant new AUM growth. For example, the active core bond ETF SMTH has seen its AUM rise by just about $1 billion since last March. The fund’s approach to bonds and its appeal as a core allocation could explain why it has seen such significant inflows.
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The ALPS Smith Core Plus Bond ETF (SMTH ) charges 59 basis points (bps) to actively invest in global debt securities of any maturity or credit quality. In doing so, it aims to provide a high level of current income and capital appreciation via its global bond portfolio.
SMTH's Active Core Bond ETF Approach
Applying a bottom-up approach, its managers consider securities from government notes to corporate bonds, convertible bonds to residential mortgage-backed securities, and more. What’s more, the strategy also considers commercial loans, money market instruments, and more. The active core bond ETF considers factors like yield, credit ratings, call risk, and liquidity, as well. It may invest in some high-yield bonds, capped at 20%.
According to ETF Database data, SMTH has seen $730 million of its net inflows in the last six months, indicating some acceleration in AUM growth. The fund offered a 4.5% trailing 12-month yield as of March 26 per SS&C ALPS Advisors data. In terms of performance, the fund has returned 6.1% since inception as of December 31.
Looking ahead, the strategy’s active core bond ETF approach could really stand out as uncertainty grows. Where passive funds often struggle to replicate their indexes, active flexibility can often better meet a fund’s stated allocation goals. For those looking to refresh their core fixed income allocation, SMTH may be one to watch.
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