Active fixed income ETFs have come on in leaps and bounds in recent years. Combining the strengths of active investing and the ETF wrapper, active bond ETFs have grown rapidly in number and AUM since the arrival of the ETF rule in 2019. Now, with fixed income increasingly a priority for investors, those active bond ETFs may have their moment to shine.
Active Fixed Income ETFs Star at Symposium
VettaFi’s 2026 Market Outlook Symposium included much discussion of the category during an aptly titled panel, “Active Fixed Income in Focus.” Hosted by VettaFi Head of Sector & Industry Research Roxana Islam, the panel included leaders from both PIMCO and Goldman Sachs Asset Management. PIMCO Managing Director & Lead Portfolio Manager Dan Hyman and Goldman Sachs Asset Management Client Portfolio Manager Alexa Gordon joined as panelists and shared their thoughts on the fixed income outlook entering 2026.
The pair shared their perspective on which active fixed income strategies might be most attractive in the new year. With factors like a pressured Fed, a declining dollar, accumulating U.S. debt, and more all impacting the bond market, the two had thoughts on where to go next.
Gordon, herself, noted events like Liberation Day tariffs, a cutting Fed, a sluggish economy, and the past government shutdown as all factors of concern. Together, she noted, while investors should consider what their own portfolios are trying to achieve, there are three themes in her view.
Themes for 2026
First off, she noted, investors may want to consider getting out of cash. With the Fed continuing to cut, she said, with rates potentially closer to 3 or 3.5% in the coming year, the opportunity is there to lock in yield.
“We see over seven trillion in assets and money market funds, and now is really the time to lock in yields, why they still exist and are attractive,” Gordon said.
Gordon noted as a second theme for 2026 the idea of upgrading investors core fixed income allocations. Active management can help in that core space, she explained, particularly with longer duration. Finally, she added, tax-optimized strategies continue to be a focus.
Hyman agreed that investors may want to get out of cash. For him, high quality bonds stand out right now, offering 5%, 6%, and 7% yield for investors.
“I like to remind myself, when thinking about what that means,” Hyman said. “If you think inflation is between 2% or 3%, a 2% real yield improves your clients purchasing power by 50% over the next 20 years. A 3% real yield improves it by 80%. So there's pretty good opportunities in fixed income.”
Fixed Income: Diversifier Once More?
Further, Hyman pointed to fixed income’s role as a diversifier. Noting that it feels like the category is “back” to serving that role, equities and bonds once again see inversely correlated performance. As for where he sees the value in fixed income, he reiterated the merits of high quality.
“Some of our favorite opportunities are in spaces like securitized products, high quality agency backed mortgages,” he said. “These are your Feddies, Fannies... and your Ginnie Mae securities, which offer a substantial yield pick over treasuries and offering yields very similar to investment grade credit.”
“So again, an opportunity to go up in credit quality, moving out of single A credit risk into higher quality assets, but not having to compromise yield,” he added.
PIMCO is underweight to corporate credit relative to other benchmarks, he said. He explained that where expectations may point to a world in which investors have to move down in credit quality to get more yield, today offers different opportunities.
“Today, when you look at spreads across the corporate bond sector, they're historically very narrow. When you look at spreads across the securitized sector, they're historically fair to extremely cheap,” Hyman said. “It's not what the textbook tells you … so we think it's a pretty unique opportunity for investors to take advantage of.”
Panel Respondents Weight In
Panel viewers also had the opportunity to chime in with their preferred usage for active fixed income ETFs. Attendees were asked how they use active fixed income in their portfolios, receiving intriguing answers from respondents. Some 43% said they use active fixed income as a core allocation, 28% use it across core and satellite options, 22% said they do not use active fixed income, and finally just 7% said they use it as a satellite sleeve in their portfolios.
Both panelists’ firms offer a variety of active fixed income ETFs for investors to consider. The PIMCO Mortgage-Backed Securities Active ETF (PMBS), for example, offers exposure to the areas Hyman noted. It charges 88 basis points (bps) for its active approach to the space.
Goldman Sachs, meanwhile, offers active fixed income ETFs like the GS Corporate Bond ETF (GIGL) that may appeal. It charges 29 bps to invest in corporates. Together, active fixed income ETFs from firms like GSAM and PIMCO could provide a strong boost for portfolios in the new year.
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