With the Fed’s rate-cutting cycle underway and the new year fast approaching, how should advisors and investors be looking to position their fixed income portfolios?
Recently, the MFS team examined the state of play in the global fixed income market in its Q4 2025 Portfolio Perspectives. In the report, the MFS team evaluated how credit spreads and yields are shaping opportunities in fixed income security selection.
To start, the MFS report noted that credit spreads have been tightening for the most part recently. In particular, the report noted that the Global Investment Grade index was trading inside of 80 basis points as of September 30th, 2025.
However, tight credit spreads aren’t necessarily telling the entire story. The MFS team noted that fundamentals remained strong both domestically and globally. Within the United States, the OBBBA may bolster corporate stability and capital spending alike. Likewise, MFS noted that leverage in Europe is creating a more favorable environment for global credit.
“From a technical standpoint, investor demand has been incredibly strong, far outstripping supply,” the MFS team added. "An aging retail investor base, combined with derisking of corporate pension plans, has helped keep demand high.
This is all happening while yields sit at a relatively sunny range. Even if spreads are tight, favorable yields are creating a more encouraging risk profile for investors building their fixed income portfolio.
Active Core Plus Bond ETFs Offer a Stable Ballast
The key to building a resilient fixed income portfolio starts with a strong foundation. A fund like the MFS Active Core Plus Bond ETF (MFSB ) could offer a potential use case to meet this moment.
True to its name, MFSB leverages the MFS team’s experience with active management to pilot a core-plus-bond ETF. The fund is macro aware but uses a bottom-up approach to security selection, choosing bonds with a combination of attractive fundamentals and valuations —notably, MFSB tilts toward credit markets.
To help stay ahead of traditional bond funds, MFSB has plenty of tools at its disposal. Leveraging the flexibility of active management, the fund may opportunistically seek to generate additional yield through selective high yield investments. Furthermore, MSFB seeks to amplify value through sector tilts and quality allocations.
MSFB’s strategy has paid off thus far this year, as the fund continues to offer solid income. As of September 30, 2025, MFSB has a 30-day SEC yield of 4.79%.
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