While active fixed-income ETFs were the first active ETFs to hit the market years ago, lately, they seem to exist in a small universe. But with interest rates near zero, is active a potential solution in the hunt for yield? ETF Trends spoke with Scott Kefer, Senior Portfolio Strategist for Victory Capital, about a couple of fund strategies, their USAA ETFs, which are looking to hit a three-year record, and further capitalize on the potential of an area that’s been given less focus.

Specifically, the VictoryShares USAA Core Intermediate-Term Bond ETF (UITB) and the VictoryShares USAA Core Short-TermBond ETF (USTB) are the funds being looked at. As Kefer explains, there’s like no more than a dozen peers in the space that have built a two-year track record, let alone three.

UITB Chart

UITB data by YCharts

USTB Chart

USTB data by YCharts

As he explains, “The growth within the active segment of the fixed-income market has led us to believe we have two great products. It’s something we continue to have a desire to build more of. We’re seeing traction for sure.”

Performance for active managers in the ETF space has been a mixed back, but the 3rd quarter let many active bond managers shine.  For example, the intermediate product beat its core benchmark by almost a percent in just the quarter, as the fed started winding down purchases of corporate bonds that may have led to inflated prices and depressed yields in the second quarter.

“One thing’s for certain,” said Dave Nadig, ETF Trends Director of Research, “investors are going to have to do something different in 2021 if they’re looking to the broad bond market. Traditional indexes don’t have much room to perform well in a zero-rate environment.”

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