Investors and advisors, alike, may be taking a look at market uncertainty and feeling the pull of some steady, reliable income. Market volatility from tariff news can really throw investors plans – and portfolios – for a whirl. Stagflation is nothing to sniff at either, with shifting rates making fixed income a complicated place to navigate. That makes things particularly difficult for those with big fixed income allocations, like those nearing retirement. A current income ETF can help, with an active fund like MUSI offering a notable spin.
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MUSI, the American Century Multisector Income ETF, charges a 37 basis point (bps) fee for its approach to income. The strategy produces a broad-based, global portfolio with no specific target duration as it focuses on its goal of providing current income and total return. Specifically, MUSI invests in high yield bonds, bank loans, emerging market debt, investment grade corporates, and more.
The active income ETF’s managers apply a model using both fundamental and quantitative inputs. Its active remit includes accounting for factors like interest rates, credit metrics, and the global macroeconomic outlook. The fund can also use derivatives to provide that current income.
How, then, has the fund done with that approach? MUSI offered a 5.9% 12-month distribution rate as of September 30th according to American Century Investments data. The ETF itself has returned 6.7% YTD according to ETF Database data.
That has outperformed both its ETF Database Category and Factset Segment averages in that time. The fund has also outperformed those averages over the last three years, as well, indicating its approach offers longer term performance. Notably, that has also outperformed the Bloomberg U.S. Aggregate Bond Index, the Agg, in that time, per American Century Investments data.
Looking ahead, the fund’s broad remit and model-based approach can make it a strong option. What’s more, MUSI’s active income ETF strategy allows it to be flexible as it considers its potential investments. Should rates continue to fall, or economic volatility take a bite out of dividends, MUSI could be worth considering.
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