Key trends like AI investing, geopolitical risk, and Fed narratives all dominate the market headlines. However, savvy investors know that sometimes, the big stories fly under the radar. With the dust settled on 2025, the data show the year saw a record number of mutual fund to ETF conversions. Significant on its own, that news speaks to the growing appeal of active fixed income ETF investing, as with the recent DSCO conversion from mutual fund DBLX.
See more: 2025 Marked a Record Number of Mutual Fund to ETF Conversions
The DoubleLine Securitized Credit ETF (DSCO) officially converted from the DoubleLine Securitized Credit Fund (DBLIX) this week. The move brings the fund’s active income and total return strategy to the ETF wrapper, adding the latter’s flexibility and tax efficiency.
“An ETF structure broadens access to our Securitized Credit strategy to investors in a transparent and efficient vehicle,” DoubleLine President Ron Redell said in a press release. “DoubleLine continues to enhance our mutual funds, separate accounts, ETFs, collective investment trusts and other vehicles to suit the preferences of our clients.”
Mutual Funds Converting to Active Fixed Income ETFs
DSCO is not the only fund to recently convert to an ETF wrapper. It is not the only active fixed income ETF conversion in recent months, either. AllianceBernstein (AB) converted two muni bond funds to the ETF wrapper in November. The Eaton Vance Mortgage Opportunities ETF (EVMO) converted to the ETF wrapper in August from a mutual fund wrapper, too.
Those conversions speak to the growing demand for active fixed income strategies. What advantages would active fixed income ETF strategies have over their mutual fund peers? ETFs provide a greater degree of flexibility, tradability, and tax efficiency. Tax efficiency can help ETFs deliver on fixed income-related goals for retirement, while their tradability has also appealed.
Active fixed income ETFs also have a notable advantage over passive funds. Passive funds can struggle to replace bonds that are called early or default. Active fixed income ETFs can do so with little trouble.
While the ETF wrapper has been around for decades, it has exploded in popularity in recent years. As firms increasingly swap the mutual fund wrapper for the ETF wrapper, investors will see more options with which to invest.
Originally published on Advisor Perspectives
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