These are halcyon days for actively managed ETFs. And fixed income products are significant contributors to that upswing. One reason advisors and income investors are flocking to actively managed bond ETFs is that they want to go beyond the “core” or the “agg” regarding aggregate bond products. Many previous iterations of these index-based.
Yesteryear’s core bond ETFs are often low-cost and provide exposure to thousands of securities under one umbrella. But there’s room for improvement and some active ETFs are seizing upon that opportunity. The Thornburg Core Plus Bond ETF (TPLS), which debuted in February, merits a place in the conversation next-generation core bond ETFs.
TPLS could be optimally timed. That's because today’s sophisticated advisors and their savvy clients are increasingly demanding more than just “bond basics. ”
“As ETF providers turn their focus toward fixed income, there has never been a more interesting time to browse the menu of bond ETFs,” noted Morningstar’s Lan Anh Tran. “Gone are the days where plain index fund bonds were your only options for an ETF portfolio. Here are three interesting bond ETFs that take less conventional approaches toward great results. ”
TPLS Tailwinds
Demographic trends in the U. S. could bode well for the TPLS growth trajectory. Thousands of baby boomers retire daily. And as they age, their investment risk tolerances turn conservative. Capital preservation and income are becoming higher priorities for them. ETFs such as TPLS can answer those calls while potentially allowing for better outcomes than what passive core bond funds deliver.
“As the population ages, it brings investors closer to their postretirement years,” observed Jeffrey Ptak of Morningstar. “With a shorter time horizon and less margin for error, they increasingly favor the stability and predictability of fixed income. This likely explains the overarching pattern of inflows to bond funds over this period, despite their pedestrian returns and low yields. ”
Forty-seven percent of TPLS holdings are U. S. government debt. Roughly a quarter of the rest of the portfolio is rated AAA, AA or A. That indicates this new ETF is suitable for risk-averse fixed income investors.
These are favorable traits, to be sure. But they don’t diminish the allure of TPLS for investors looking to add a bit more spice to their fixed income portfolios. For example, 34. 1% of the TPLS roster comprises corporate bonds versus 24. 1% in the benchmark. Corporate bond exposure, particularly when actively managed, can generate credit and yield opportunities for end users. Speaking of yield, TPLS has the flexibility to allocate 25% of its roster to high-yield bonds, though that percentage currently rests at a modest 7. 5%.
Thornburg ETF Tidbits
TPLS is one of four Thornburg ETFs and it’s possible that the combination of brand recognition and booming demand for active ETFs could compel the issuer to bring more products to market. Two of the issuer’s ETFs are fixed income products while the other are international equity funds indicating Thornburg is at the right place at the right time with its ETFs because interest rates are declining and ex-US stock are among 2025’s most resurgent asset classes.
Regarding the Thornburg Core Plus Bond ETF, that fund is “managed by Lon Erickson, CFA, and Christian Hoffmann, CFA, is actively managed and seeks total return, consisting of income and capital appreciation. It manages risk through a portfolio comprised primarily of high-quality investment-grade bonds, complemented by up to 25% in below-investment-grade securities,” according to a statement.
