If the macroeconomic movements of 2025 have taught advisors anything, it’s that diversification is paramount for a well-rounded portfolio.
We’re certainly seeing advisors build more diversified portfolios when it comes to equities. Once the U.S. equity market started getting rattled, many branched out their portfolios to include international stocks and other equity solutions.
However, equities aren’t the only securities that could benefit from diversification right now. In fact, now may be a crucial moment for fostering a more well-balanced fixed income portfolio.
There are plenty of macroeconomic factors that could call for a diversified approach to fixed income, but none may be more urgent than the Federal Reserve. The Fed has yet to make a judgment call on trimming interest rates soon, but pressure is continuing to mount for Fed Chair Powell to do so.
Regardless of whether the Fed trims interest rates in July, it’s likely at least some sectors of the fixed income market will see noticeable shifts in the weeks to come. As such, it could pay off to approach fixed income investing in a more broadly diversified manner.
MUSI Offers a Balanced Approach to Fixed Income
The flexibility of the ETF wrapper can make building a diversified fixed income portfolio a fairly straightforward process. For instance, take a closer look at the American Century Multisector Income ETF (MUSI).
MUSI is an actively managed fund that looks to generate yield and capital appreciation through a broad portfolio of fixed income securities. This includes investment-grade and high-yield bonds, along with mortgage-backed securities, emerging market debt, and other fixed income securities.
MUSI’s approach ensures that the fund has access to a wide number of different routes for returns and yield. This limits the fund’s vulnerability if a specific fixed income sector undergoes underperformance. Additionally, MUSI’s active management means the fund can approach each market cycle with more opportune sector weightings.
A diversified fixed income selection isn’t just beneficial for risk management. As of May 31, 2025, MUSI has a 12-month distribution rate of 6.02%. This competitive yield showcases the advantages that diversified fixed income streams can bring to a portfolio.
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