The Federal Reserve has delivered two interest rate cuts this year. And there’s significant momentum for actively managed bond ETFs. Those two factors bode well for funds such as the Neuberger Berman Total Return Bond ETF (NBTR ).
NBTR, which turns two years old next month, is an active spin on standard aggregate bond ETFs. That management style is making a difference this year. While the Bloomberg U.S. Aggregate Bond Index is up slightly more than 7% YTD, the fund attempts to beat that index. It’s sporting a 2025 gain closer to 8%. Catalysts are afoot to propel NBTR into year-end and to a potentially compelling showing in 2026.
“We believe the Fed will cut rates by 25 basis points in both October and December following them up with two more cuts in 2026,” according to Goldman Sachs Asset Management (GSAM). “The Fed has delivered on its prior indications of not tolerating labor market weakness, and the material fall in nonfarm payrolls and downward revisions of previous numbers we believe puts it on the path for further easing.”
Nimble NBTR Matters Today
Active fixed income ETFs could be near-term beneficiaries of the longest-government shutdown on record drawing to a close, hopefully. But the Fed looms large in the equation.
“The September dot plot indicated that the Fed’s base case was also for two more cuts this year, but with a narrow 10-9 split among the committee. We believe this baseline is firmer than the split suggests however, assuming (Chairman Jerome) Powell and other core Federal Open Market Committee (FOMC) members were among those backing two cuts,” added GSAM.
NBTR and Treasuries could gain further support if the dollar, which has been under siege this year, steadies. History indicates that following the start of Fed easing cycles, the dollar often doesn’t decline as expected. Should that precedent hold true to form, dollar-denominated debt — including bonds residing in NBTR — could be viewed as attractive by global investors.
NBTR, which has a 30-day SEC yield of almost 5%, sports a duration of 5.85 years. That puts the ETF in intermediate-term territory. That’s a potentially advantageous place to be at a time when some experts believe the combination of active management and compelling yields on intermediate-term bonds could bring more advisors and investors into this corner of the fixed income market.
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