In a world increasingly shaped by geopolitical uncertainty, volatile markets, and shifting monetary policy, investors are seeking stability, flexibility, and efficiency in their portfolios. ÃÛ¶¹ÊÓƵ Core Fixed Income ETFs are designed to meet these needs - offering a compelling solution for investors navigating today’s complex environment.

The case for Core Fixed Income ETFs

Core fixed income ETFs are designed to serve as the foundational building blocks of a bond portfolio. These funds typically track broad-based indices composed of government and investment-grade corporate. Their appeal lies in their ability to deliver diversified exposure to high-quality fixed income assets at low cost, while offering intra-day liquidity and price transparency.

Several structural and cyclical factors are currently reinforcing the case for core fixed income ETFs:

  • Multi-year high yields: After a decade of ultra-low interest rates, yields across the fixed income spectrum have risen sharply and remain elevated (Figure 1). Core bond ETFs now offer attractive income potential without requiring investors to assume excessive credit or duration risk. For example, intermediate-term government and corporate bond ETFs are yielding levels not seen since before the global financial crisis, making them a viable source of income and capital preservation.1
  • Market uncertainty and volatility: Geopolitical tensions, divergent central bank policies, and uneven economic growth have created a landscape where agility is paramount. Core ETFs allow investors to adjust exposures quickly in response to changing market conditions – something far more cumbersome with individual bonds or traditional mutual funds.
  • Dynamic portfolio adaptability: The ETF structure enables real-time trading and tactical allocation shifts. Investors can tilt core holdings toward specific sectors, credit qualities, or geographies without disrupting the overall portfolio structure. This adaptability is especially valuable in a market where inflation surprises, policy pivots, and liquidity shocks can rapidly alter risk-reward dynamics.
  • Transparency and clarity: Core fixed income ETFs provide full visibility into portfolio holdings and pricing, with daily disclosures and real-time market data. This transparency enhances risk oversight and supports more informed, confident decision-making – particularly in fast-moving or uncertain market environments.

Figure 1: Yield to maturity snapshot (unhedged, %)

Yields for Euro, US, and global bonds far exceed 10-year averages, showing a sharp rise across all fixed income segments.
Source: ÃÛ¶¹ÊÓƵ Asset Management, data from Bloomberg, as of 16 June 2025.

The bar graph compares the current yield-to-maturity of various fixed income segments—Euro, US, and global corporates and governments—against their 10-year historical averages, highlighting the significant rise in yields across all categories.

Flexibility through maturity band ETFs

One of the standout features of ÃÛ¶¹ÊÓƵ’s fixed income ETF offering is the inclusion of maturity band ETFs. These products allow investors to fine-tune duration exposure – an essential capability in a market where interest rate expectations can shift rapidly.

For instance, investors concerned about rising rates can tilt toward shorter-duration ETFs, while those anticipating rate cuts may prefer longer-duration exposures to capture potential price appreciation. This flexibility is particularly valuable in the current environment, where central banks are signaling divergent paths and inflation remains a wildcard.

These investment view adjustments can be executed with confidence, as the additional liquidity filters applied to our corporate ETFs help reduce transaction costs within the fund which can still be significantly higher in fixed income than in equity.

Implementing views on inflation, sectors, and geographies

ÃÛ¶¹ÊÓƵ Core Fixed Income ETFs enable investors to express macroeconomic views efficiently. They support positioning not only on inflation, but also across sectors – such as Treasuries versus corporates – and geographies.

For example, an investor expecting rising US inflation and stronger corporate performance could combine inflation-linked exposures with US corporate bond ETFs to reflect both views while benefiting from the transparency and efficiency of ETF investing.

Who should consider ÃÛ¶¹ÊÓƵ Core Fixed Income ETFs?

These ETFs are well-suited for a wide range of investors – from conservative price-sensitive investors seeking income and capital preservation to sophisticated allocators looking to build resilient core portfolios. They can serve as standalone holdings or as part of a core-satellite strategy, aiming to provide stability while more tactical positions are taken elsewhere.

For financial advisors and institutional clients, the transparency and scalability of ETFs, combined with their low-cost structures, make them ideal tools for implementing model portfolios and managing client mandates efficiently.

A core solution for a complex world

ÃÛ¶¹ÊÓƵ Core Fixed Income ETFs offer a timely blend of yield, flexibility, and institutional quality. Whether anchoring a portfolio, expressing a macro view, or enhancing income, they help construct robust and adaptable investment strategies.

With tools like maturity band ETFs for duration management and diversified exposures for implementing inflation, sector, and geographic views, the ÃÛ¶¹ÊÓƵ Core Fixed Income ETF range empowers investors to navigate complexity with confidence.

Risks

As with any investment, fixed income ETFs carry risks. Interest rate movements, credit events, and liquidity conditions can all impact performance. While the ETF structure offers many benefits, it does not eliminate market risk. Investors should also be mindful of tracking error, especially in more specialized or thinly traded segments.

ÃÛ¶¹ÊÓƵ provides detailed risk disclosures and analytics to help investors understand the characteristics of each ETF and how it fits within their broader portfolio.

1 Historical performance indications and financial market scenarios are not reliable indicators of future performance.
This does not constitute a guarantee by ÃÛ¶¹ÊÓƵ Asset Management.
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