An actively managed bond fund from SS&C ALPS Advisors has attracted close to $1 billion in net inflows over the past year as investors position portfolios for an environment where security selection could provide an advantage over passive index tracking.
Major financial institutions’ market outlooks, including Charles Schwab and Morgan Stanley, forecast that 2026 will bring steepening yield curves and widening investment-grade credit spreads. This combination creates opportunities for bond managers who can actively shift between sectors rather than tracking volatile indexes.
The ALPS Smith Core Plus Bond ETF (SMTH ) has grown to $2.3 billion in assets, according to ETF Database. The fund pulled in $951.05 million in net flows over the past 12 months.
SMTH posted a 6.52% return year to date through early December. With this, it edged out the 6.45% average for its category, according to ETF Database. Additionally, over the trailing 12 months, the fund returned 5.95%, compared with the 5.93% category average.
Managed by Gibson Smith and Eric Bernum, the fund charges a 0.59% expense ratio. The fund currently offers investors a 4.19% 30-day SEC yield, according to its September fact sheet.
Active Approach to Bond Investing
According to Charles Schwab’s 2026 fixed income outlook, actively managed portfolios can generate additional return through “carry” and “roll” strategies when yield curves steepen. Passive strategies will track indexes that may experience heightened volatility.
Carry refers to selling shorter-term bonds with lower yields and reinvesting in longer-term bonds to earn the difference in yield, per Schwab. Roll involves managing a portfolio’s duration to capture capital gains as bonds move along the yield curve.
Morgan Stanley analysts expect investment-grade spreads to widen as technology companies issue debt to fund artificial intelligence infrastructure buildouts. The firm estimates less than 20% of an expected $3 trillion in data center-related capital expenditures has been deployed to date, according to its outlook.
The fund holds a mix of corporate bonds, government securities, securitized debt and preferred stock, according to its fact sheet. The fund’s investment approach includes dynamic portfolio positioning with allocation flexibility.
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