When looking at both the domestic and global fixed income markets, to say they are both experiencing a little bit of dispersion right now would be an understatement, to say the least. Just looking within the United States, advisors and investors alike are facing a host of pressures when constructing their fixed income portfolios, be it interest rate risk, shifting policy, credit risk, or something else entirely.
As part of the BNY Market Pulse series, Nathaniel Hyde, senior portfolio manager at Insight Investment, explained how volatility and shifting policy conditions can create different opportunities across the fixed income sector. Within the United States, where the household sector is dealing with pressure from both inflation and underwhelming nominal wage growth, Hyde noted that the Federal Reserve is facing a difficult environment for drafting monetary policy.
However, there are some compelling credit opportunities in the U.S. market. For instance, as Hyde pointed out, business growth could continue to be buoyed by AI adoption.
“In the U.S., our outlook for slightly elevated inflation and at trend growth could provide a supportive backdrop for risk assets, while allowing the Federal Reserve sufficient flexibility to continue easing monetary policy,” Hyde added.
Active Exposure Brings a Competitive Advantage
For investors looking to amplify exposure to risk-on fixed income assets, actively managed ETFs can be a strategic tool. Active management can offer more flexibility and adaptability to both capture better opportunities and mitigate potential risks.
The BNY Mellon High Yield ETF (BKHY ) offers an actively managed route to high yield bond exposure. BKHY uses a proprietary credit model to first build a portfolio that is similar to the Bloomberg US Corporate High Yield Total Return Index.
From there, the fund’s credit model then seeks outperformance through a few different vectors. For instance, BKHY may look to capitalize on fallen angels or alter individual security weightings. Generally speaking, the model seeks to minimize exposure to bonds deemed overpriced or of lower quality.
Thus far, BKHY has lived up to its promise, offering competitively strong yield to begin the year. As of March 2, 2026, the fund has a current yield of 6.95%.
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