Infrastructure Capital Advisors has launched a new Exchange Traded Fund (ETF) designed to provide investors with strategic access to the corporate bond market. The Infrastructure Capital Bond Income ETF (ARCA: BNDS) aims to maximize current income and pursue capital appreciation through an actively managed portfolio of fixed-income securities.
The new ETF comes at a time of robust corporate financial health, with companies demonstrating resilient profits and increasing cash balances. Corporate bond markets have shown promising indicators, including tight spreads between corporate bonds and Treasury securities, suggesting reduced risk for investors.
The fund will primarily invest in corporate bonds, with up to 80% of its total assets allocated to fixed-income securities. Additionally, the ETF may include municipal and government bonds, with a potential allocation of up to 20% in equities. Portfolio managers Jay D. Hatfield and Andrew Meleney will employ a combination of quantitative and qualitative analysis to identify undervalued securities.
Current market conditions appear favorable for bond investments, with investment-grade corporate bonds offering average yields around 5.6%. Economic factors such as low unemployment, rising wages, and potential future interest rate cuts by the Federal Reserve further enhance the attractiveness of corporate bond investments.
Hatfield emphasized the importance of active management in income investing, noting that the ETF will focus on managing interest rate, credit, and call risks. The launch of BNDS represents a strategic response to challenges faced by income investors, including high inflation and historically low yields in traditional market benchmarks.
