Active fixed income ETFs have gained significant traction in 2025, and with the recent Fed rate cut, we anticipate that this demand will continue through the end of the year and into 2026.
I have extensively covered active fixed income ETFs on this platform, particularly as the category expands. The supply of active ETFs is increasing alongside the demand for these investment vehicles. Instead of reiterating my perspective, I will share insights from the attendees and speakers at VettaFi’s Q3 Fixed Income Symposium.
During the event, we engaged in a two-hour virtual fireside chat featuring asset managers like PIMCO and Vanguard, who shared their perspectives on the fixed income landscape following the Fed’s first rate cut of 2025. Active management emerged as a focal point of discussion, and for good reason.
We surveyed the advisor audience about their views on active management in fixed income. An impressive 71% of respondents expressed confidence that active management can enhance investment value, while only 9% favored an indexed approach.
Vanguard Is More Than an Index ETF Provider
To delve deeper into the topic, let’s highlight some expert insights. Samuel Martinez, head of active fixed income product management at Vanguard, emphasized during the symposium that “despite our reputation at Vanguard as being very index-oriented, we have a robust active business that has been part of our DNA since our founding over 50 years ago.”
Martinez noted that “there are numerous alpha opportunities in fixed income, primarily derived from security selection and portfolio construction. Scale is crucial, as substantial resources are needed to drive value and earn those basis points.”
He further explained, “Active funds with lower expense ratios often exhibit similar upside capture ratios as their more expensive counterparts, but with significantly better downside capture ratios. This indicates a greater likelihood of outperforming in both rising and falling markets.”
Vanguard has expanded its active fixed income ETF lineup recently. For instance, the Vanguard Government Securities Active ETF (VGVT) launched in July 2025, focusing on intermediate-term Treasury and government agency bonds. Additionally, the Vanguard High-Yield Active ETF (VGHY) debuted this month, targeting higher credit risk for greater yield.
PIMCO: An ETF Pioneer With More to Offer
While Vanguard introduces new ETFs, PIMCO has been a pioneer in the active fixed income ETF space, launching its first fund over 15 years ago. Jerome Schneider, head of short-term portfolio management at PIMCO, discussed the evolution of active fixed income ETFs at the Symposium. He manages the PIMCO Enhanced Short Maturity Active ETF (MINT), which launched in late 2009 and focuses on minimizing interest rate risk through government securities and investment-grade credit, recently yielding 4.3%.
Schneider remarked that “the Fed rate cuts have prompted many investors to reassess their capital management strategies, particularly regarding cash and risk allocations moving forward.”
He added, “As yields on money market funds and treasury bills reset to lower levels, investors must reconsider their acceptance of lower rates for cash. One way to navigate this is through active management, focusing on capital preservation and exploring fixed income opportunities to enhance total returns.”
Schneider also manages the PIMCO Ultra-Short Government Active ETF (BILZ), which began trading in 2023 and offers a 30-day SEC yield of 4.1%. This ETF combines Treasuries and Agencies with limited interest rate sensitivity, complementing PIMCO’s extensive range of active fixed income ETFs.
For more news, information, and strategy, visit the Fixed Income Content Hub.
