ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Alternatives Channel
      • Artificial Intelligence
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Education
      • ETF Investing
      • ETF Strategist
      • Faith-Based Investing
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Invest Beyond Cash
      • Leveraged & Inverse
      • Modern Alpha
      • Portfolio Strategies
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Gold/Silver/Critical Materials
        • Crypytocurrency
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
    • Market Outlook
    • Crypto ETF Hub
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Database Categories
    • Indexes
    • Scenario Analysis
    • Watchlists
    • Head-To-Head ETF Comparison Tool
    • Mutual Fund To ETF Converter
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • Gaining Perspective Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Tax Efficient Income Channel
  2. Get Active Exposure as Corporate Confidence Returns in Bonds
Tax Efficient Income Channel
Share

Get Active Exposure as Corporate Confidence Returns in Bonds

Ben HernandezSep 15, 2023
2023-09-15

Confidence is returning to the bond markets and one sign is corporations’ willingness to start taking on debt again with new issuance.

While inflation is still high, the expectation is that the Federal Reserve will eventually lessen the pace of interest rate hikes. That said, companies may be more apt to start borrowing again and re-finance the debt at lower rates in the future when the Fed eventually loosens monetary policy.

“Companies have rushed to borrow tens of billions of dollars this week, a sign that optimism about the outlook for the economy is beginning to take hold,” the New York Times reported.

The threat of a recession still looms, which could be an ideal scenario for bonds given their use as a safe haven asset. However, those thoughts of a recession may be slowly fading into the background.

“It’s a sign of rising confidence that companies are willing to borrow rather than conservatively manage their debt loads, and investors are willing to lend rather than sit on cash, as concerns about a potential recession diminish,” the NY Times added further.

To get access to core bond exposure, exchange traded funds (ETFs) can offer investors that level of access. With a plethora of ETF options in the market, certain investors may want to focus on core exposure with tax-efficient income generation.

Tax-Efficient Income Generation

That said, investors looking to get core bond exposure with an added bonus of income generation may want to take a look at the actively managed NEOS Enhanced Income Aggregate Bond ETF (BNDI A-). The active component allows the fund’s portfolio managers to remain pliable with market conditions, allowing them to adjust holdings when market conditions warrant adjustments.

The majority of the fund rests in holdings of other ETFs — namely the Vanguard Total Bond Market ETF (BND A) and the iShares Core U.S. Aggregate Bond ETF (AGG A). Both funds are heavily used in the ETF market as tools for core bond exposure, providing liquidity, which is ideal in an active fund.

To extract more income from the market, the fund also includes the sale of SPX Index options classified as section 1256 contracts, which are subject to lower 60/40 tax rates. This is where the fund’s tax efficiency offers investors income while decreasing their tax burden.

In terms of yield, BNDI offers a monthly distribution currently (as of August 31) of 5.25% with a 30-day SEC yield of 2.40%. The fund’s gross expense ratio comes in at 0.61% while the next expense ratio is 0.58%.

For more news, information, and analysis, visit the Tax Efficient Income Channel.


Content continues below advertisement

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2025 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X