With the Federal Reserve's next move on interest rates uncertain, income-seeking investors are navigating a challenging landscape. Inflation remains above the Fed's target, and unemployment is at a healthy 4%, yet economists and some Fed governors are split on whether a rate hike will be enough to tame rising prices. The war in Iran and tariffs are cited as contributing factors. Meanwhile, the White House would like new Fed chair Kevin Warsh to keep rates steady or even cut them, though the odds of a cut were slim when the Fed met on September 15 and 16.
This uncertainty is adding to market volatility. Historically, if the Fed raises rates, cash investments like savings accounts and money market funds pay more income, but older bonds and growth stocks could take a hit. If the Fed keeps rates steady, the stock market might stabilize, but cash earnings stop growing. In such an unpredictable market, an actively managed ETF can adjust on the fly to help keep income flowing without taking on extra risk.
That's the strategy behind the Infrastructure Capital Bond Income ETF (NYSE: BNDS). BNDS is an actively managed ETF whose primary objective is to maximize income, with a secondary objective of capital appreciation. The fund invests at least 80% of its total assets in fixed-income securities, primarily corporate bonds, focusing on sectors and issuers with strong cash flows and pricing power.
The management team uses a flexible mix of quantitative and qualitative analysis to evaluate relative value opportunities across fixed-income markets. BNDS then applies fundamental analysis to issuers, reviewing enterprise value, capital ratios, and operating metrics to determine financial health and ability to service debt.
What sets BNDS apart is its active management, which allows it to opportunistically employ an option-writing strategy to enhance income. While high-yield bond funds can be volatile, especially amid Fed uncertainty, the fund's managers believe that adding options can translate volatility into higher premiums for option sellers, providing an additional source of income. Distributions are monthly, and the fund has a 30-day SEC yield of 8.01% as of September 9, 2026.
At the helm is Jay D. Hatfield, founder, CEO, and portfolio manager of Infrastructure Capital Advisors. With nearly three decades of experience across investment banking, hedge fund management, and portfolio construction, Hatfield has focused on income-generating securities and companies tied to real assets like energy infrastructure and real estate. Before launching Infrastructure Capital, he co-founded NGL Energy Partners and managed income-oriented portfolios at SAC Capital (now Point72) and Zimmer Lucas Partners.
For income-focused investors, the appeal of an actively managed fund like BNDS is its ability to adapt to changing market conditions while seeking to maximize income. As Fed policy remains a key driver of market volatility, such strategies may offer a way to navigate uncertainty while pursuing consistent income.
