Angel Oak Income ETF

CARY

Market cap $870M

The Angel Oak Income ETF focuses on high-quality, shorter-term MBS, with sizable investments in a couple other bond sub-asset classes. CARY's investment thesis is quite strong and balanced, with the fund offering investors an above-average 6.1% yield, above-average returns since inception, and below-average realized volatility. The main disadvantage is its 0.79% expense ratio, but the fund has more than earned its fees in the past.

Angel Oak Income ETF is well-positioned to benefit from a Fed rate-cutting cycle, focusing on mortgages and structured credit with solid fundamentals. CARY targets intermediate-term bonds, offering exposure to segments with depressed valuations and strong credit quality, especially as spreads normalize post-tightening. Active management enables CARY to quickly adjust duration and credit quality, capturing opportunities in securitized credit while mitigating interest-rate and credit risks.

Interest rates remain elevated, with high-quality, lower-risk bonds and income securities offering competitive yields. Market volatility has some investors worried, and looking for safer investments. ETFs focusing on high-quality, lower-risk, short-term securities seem like particularly interesting choices right now. A quick look at four of these follows.

BND is one of the largest bond ETFs in the market. It tracks a simple bond index, providing investors with diversified, broad-based exposure to these investments. BND compares unfavorably to several of its peers on different grounds, including dividend yield, returns, risk-adjusted returns, and tax benefits.

BINC and CARY are two of my top income ETFs. Both focus on high-quality, short-term bonds, with investments across fixed-income asset classes. BINC stands out for its broad diversification and lower expense ratio.

Some income ETFs offer investors diversified exposure to high-quality bonds across sub-asset classes. Of these, BINC, CARY, and CGMS seem like particularly strong choices, due to their above-average yields and returns, below-average risk and volatility. All are strong, broadly similar choices, with BINC having the most diversified portfolio, CGMS the highest returns, CARY the lowest volatility.

The Angel Oak Income ETF focuses on generating high interest income from a portfolio of Agency and Non-Agency MBS bonds. CARY's performance is driven by interest income and has shown resilience against interest rate fluctuations, outperforming peers with an 8.8% total return in the past year. The fund's portfolio is heavily weighted towards RMBS, with most holdings being investment grade, making interest rates the primary risk factor.

CARY holds a diversified portfolio of bonds, focusing on short-term investment-grade securities, mainly MBS. The fund's active management strategy, including overweighting MBS, has led to higher returns and outperformance compared to its benchmark and most bonds. CARY sports an above-average 5.0% yield, below-average risk and volatility, and has outperformed most peers since inception.

The Angel Oak Income ETF is an actively managed high-yield fund, primarily investing in mortgage-backed securities, collateralized obligations, and asset-backed securities. CARY has a low-risk profile for a high-yield fund, based on credit risk and historical volatility. CARY outperforms the total US bond market and a high-yield bond benchmark in risk-adjusted performance but lags three CLO ETFs.

On Seeking Alpha, I focus on dividend ETFs targeted towards income investors and retirees. Of these, six currently stand out for their comparatively high yields, strong overall risk-return profile. ETFs vary in risk, from similar to cash, to leveraged high-yield bonds and loans.