Looking for a New Active Bond ETF? Check Out 'BNDC'

Getting in and out of trading positions takes deft skill, and that’s where an active exchange traded fund (ETF) like the FlexShares Core Select Bond Fund (BNDC) can chip in.

With the rising tide of interest rates looming ahead, the fixed income notion has been to move into ultra-short bonds. Now, with the sense that inflation has peaked, getting back into longer-term debt might be the best move in the bond markets.

That kind of flipping and flopping is where an active management style that BNDC employs can help. It’s an ETF that can sway with the changing market environment when necessary.

“Despite all the talk about a rising interest rate environment in recent months, the much-followed 10-year U.S. Treasury bond is yielding just 1.3% or so,” a WTOP News article explained. “That’s down significantly from more than 1.7% earlier in 2021 and not that far off from pre-pandemic levels. While that payout may not sound like a lot, the typical dividend stock in the S&P 500 is yielding about 1.3%, too — and comes with a lot more risk. So if you’re looking for income but don’t want to suffer the volatility of stocks, bonds are still your best bet. Here are nine ways to play this asset class via exchange-traded funds.”

Focusing on the Preservation of Capital

Using its active management style, BNDC seeks total return and preservation of capital. The fund invests at least 80% of its net assets in U.S. dollar-denominated investment-grade fixed-income securities either directly or indirectly through exchange traded funds and other registered investment companies.

The fund may invest, without limitation, in mortgage- or asset-backed securities, including to-be-announced transactions, and purchase and sell securities on a when-issued, delayed delivery, or forward commitment basis.

“The FlexShares Core Select Bond Fund (BNDC) is an ETF that seeks to provide a diversified, core fixed-income portfolio that balances total return and income, while offering price stability and diversification away from equities,” a FlexShares fund focus noted. “The ETF is actively managed by institutional fixed-income managers at Northern Trust, the adviser of the FlexShares funds. These managers aim to build a diversified bond portfolio through existing ETFs, using both the FlexShares ETF family and ETFs from other providers, to provide exposure across sectors of the fixed income markets.”

“For example, the Fund captures exposure to the major fixed-income asset classes such as Treasuries, corporate bonds, and mortgage-backed securities (MBS), while also choosing ETFs that offer potentially more refined, value-added exposures to a variety of products such as TIPS,” the article added.

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