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For example, the SPDR DoubleLine Total Return Tactical ETF (NYSEArca: TOTL) has been a popular active bond play for ETF investors. TOTL is an actively managed ETF backed by bond guru Jeff Gundlach and is also seen as an ETF adaptation of the flagship DoubleLine Total Return Fund (DLTNX).
“With TOTL, investors may rely on DoubleLine Capital’s experience to help navigate an uncertain macro environment by allocating across multiple bond subsectors and applying individual security selection to potentially provide income, stability, and diversification for the core fixed income allocation,” Mazza said.
Specifically, TOTL provides a higher yield and lower duration than the benchmark Barclays U.S. Aggregate Bond Index, with a smaller standard deviation. Additionally, the active ETF has a greatly diminished exposure to U.S. Treasuries while overweighting agency MBS, non-agency debt, emerging market bonds, bank loans and high-yield, among others.
Similarly, investors seeking yields in a rising rate environment may consider the actively managed SPDR Blackstone/GSO Senior Loan ETF (NYSEArca: SRLN), which provide investors with better exposure to the senior floating rate bank loan market as a manager is more freely able to pick and choose the best securities. Blackstone/GSO, the subadvisor of SRLN, is one of the largest senior loan asset managers in the world.
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“Through rigorous credit selection, SRLN has been able to avoid weak or failing senior loans that may have been included in a passive strategy, resulting in reduced volatility and better risk adjusted performance, as measured by Sharpe Ratio,” Mazza added.
Financial advisors who are interested in learning more about actively managed ETFs can watch the webcast here on demand.