ALPS Smith Core Plus Bond ETF

SMTH

Market cap $2.08B

The rise of active ETFs has slowly but surely changed the investing landscape. Investors can get access to flexible strategies that can adapt to circumstances and often outperform passive peers.

ETFs have facilitated an active management renaissance. Nowhere is that more apparent than in the fixed income arena.

What does the future hold for fixed income? 2025 has offered some very unique factors to consider with the Federal Reserve pressured to cut rates.

Advisors and ETF industry observers know that one of the fastest-growing segments in ETF Land is at the intersection of active management and fixed income. Whether it's by way of mutual-fund-to-ETF conversions or more new ETFs coming to market, the population of active bond ETFs has swelled in recent years.

Between Moody's recent downgrade of the U.S. credit rating and the specter of significant deficit spending in the president's “big, beautiful bill,” among other factors, there's an unusual amount of headline risk currently confounding the bond market.

One of the primary reasons investors allocate to bonds is to smooth out volatility attributable to equities. But they also do because fixed income instruments are gemerally suitable for long-term holding periods.

There are fears the U.S. economy could slip into a recession. So advisors and investors are revisiting the defensive attributes offered by high-quality bonds.

As active ETFs' role in the asset management landscape continues to grow, active fixed income ETFs in particular have gathered significant new interest. That has led to new launches and significant new AUM growth.

Buoyed by a spate of mutual-fund-to-ETF conversions, active ETFs made their presence felt in 2024. That accounted for significant percentages of both inflows and launches.

The White House's tariff efforts have spooked investors in 2025. Domestic equities are therefore faltering to start the year.