Fixed income is back in vogue. In a recent 2025 outlook, Vanguard flipped the script on the traditional 60/40 model to instead suggest a 40/60 allocation that favors bonds over equities. Stretched equity valuations and ongoing volatility could depress returns, but fixed income offers real returns and solid growth potential ahead.
While active managers have the flexibility to cherry-pick fixed-income opportunities, only about 10% of total fixed income ETF assets are held in active ETFs compared to roughly 78% of the $4.5 trillion fixed income mutual fund market. With new strategies coming out every month, investors may want to reconsider active ETF alternatives.
In this article, we’ll look at three active fixed-income ETFs worth considering in today’s environment.
FIXP: A Two-Pronged Income Strategy
FolioBeyond launched its Enhanced Fixed Income Premium ETF (FIXP) in January 2025. Unlike traditional fixed-income ETFs that rely exclusively on bond yields and price appreciation for returns, FIXP enhances income potential by selling call and put options on bond sector ETFs and broad-based bond market ETFs.
In addition to this option overlay, the fund managers use quantitative frameworks and algorithms to evaluate the risk and value of different fixed-income assets rather than tracking a set index. The flexibility to shift allocations based on changing market conditions is a critical advantage when interest rates, credit spreads, and inflation are in flux.
The fund’s 1.07% expense ratio puts it in the premium segment of the active fixed-income market. While the fee is higher than many passive bond ETFs, investors seeking greater income and the potential for capital appreciation in a complex fixed-income environment may find the fund a worthwhile alternative to its passive competition.
BNDS: A Broader Universe of Options
Infrastructure Capital Advisors recently expanded its ETF lineup in January 2025 with its Capital Bond Income ETF (BNDS). Rather than adhering to index-based weightings and specific industry subsets, the actively managed fund employs a multi-factor strategy that considers term, credit, and liquidity premiums across different sectors.
Using a macroeconomic lens, the fund fine-tunes sector allocation decisions to capitalize on economic trends in real-time. Meanwhile, the managers retain the flexibility to invest in securities of any credit quality and maturity, as well as across unconventional fixed-income asset classes, like mortgage-backed and asset-backed securities.
While its expense ratio is higher than passive alternatives, the fund represents an intriguing option for income-focused investors who believe active management can deliver superior results in the fixed-income space, particularly in a market environment characterized by economic uncertainty and shifting interest rate expectations.
YFFI: Stable and Diversified
FIXP and BNDS may focus on maximizing yields through option overlays and flexible decision-making, but sometimes, investors are more concerned with preserving their principal than squeezing every penny. In that case, the Indexperts Yield Focused Fixed Income ETF (YFFI) may offer a better balance.
Unlike BNDS, the fund focuses on investment-grade securities to provide a more stable income stream with potentially lower principal volatility than high-yield-focused alternatives. But, at the same time, its active management translates to more flexibility to choose higher-yielding investment-grade bonds than passive alternatives.
Like BNDS, the fund managers seek out a broad range of fixed-income securities, including corporate bonds, Treasury notes, bills and bonds, asset-backed securities, and preferred stock. And they maintain the flexibility to adjust allocations between these assets based on their relative value and changing market conditions.
Alternative Active Fixed-Income ETFs
These active ETFs are sorted by their YTD total return, which ranges from 1.6% to 3.1%. They have AUM between $138M and $8.1B, with expenses between 0.20% and 0.71%. They are currently yielding between 4.3% and 5.2%.
| Name | Ticker | Type | Active? | AUM | YTD Total Ret (%) | Yield | Expense |
|---|---|---|---|---|---|---|---|
| PIMCO Active Bond Exchange-Traded Fund | BOND | ETF | Yes | $5.48B | 3.1% | 5% | 0.71% |
| Vanguard Core-Plus Bond ETF | VPLS | ETF | Yes | $138M | 2.4% | 4.1% | 0.2% |
| American Century Diversified Corporate Bond ETF | KORP | ETF | Yes | $393M | 2.3% | 5.2% | 0.29% |
| Fidelity Corporate Bond ETF | FCOR | ETF | Yes | $238M | 2% | 4.3% | 0.36% |
| iShares Flexible Income Active ETF | BINC | ETF | Yes | $8.14B | 1.6% | 5.1% | 0.52% |
The Bottom Line
New active fixed income ETFs like FIXP, BNDS, and YFFI represent an evolution in how investors can approach bond market exposure.
FIXP is well-suited for investors comfortable with more complex investment strategies looking for greater income potential. On the other hand, BNDS offers a simpler strategy that focuses on a broader range of assets. And YFFI focuses on investment-grade alternatives rather than BNDS’s riskier asset allocations.
