Looking to add an active core bond ETF to your portfolio? There’s still plenty of time to add to or alter a fixed income allocation to start 2024. With the interest rate picture still somewhat unclear, an active strategy in particular can adapt quickly while seeking some of the more appealing opportunities in a core space. That can also set an active core strategy apart from a passive core slice, adding to that appeal.
Those factors may point to an ETF like SMTH, the ALPS/SMITH Core Plus Bond ETF. SMTH only launched last month but has already seen more than $100 million in flows. A combination of flows and AUM together has brought the active core bond ETF to about $125 million in total AUM.
What might be driving that interest? The strategy brings together SS&C ALPS Advisors and manager Gibson Smith, founder and CIO of Denver-based Smith Capital Investors. Smith Capital Investors looks to active management for its ability to offer dynamic portfolio positioning, whether neutral, defensive, or opportunistic, and able to respond in a variety of market environments.
So how does the fund invest? SMTH looks for a high level of current income and capital appreciation with a global remit. It can invest in debt securities of any maturity and level of credit quality. The strategy assesses each debt security with a bottom-up approach. Investing in a wide range of offerings from government bonds to mortgage-backed securities, money market instruments to commercial loans, it also considers factors like yield, credit ratings, and liquidity.
Charging 59 basis points (bps), SMTH has returned 2.7% over the last month per VettaFi data. That return outpaces both its ETF Database Category and Factset Segment average. For investors looking for an active core bond ETF with a plus view from its manager, SMTH may appeal.
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