ALPS Smith Core Plus Bond ETF

SMTH

Market cap $2.55B

Advisors and investors typically embrace bonds for two primary reasons: income and portfolio protection in the event equities decline. Regarding the latter point, that's another way of saying diversification.

In the world of ETFs, actively managed fixed income is undoubtedly one of the fastest-growing segments. Indeed, the union of the ETF wrapper and bonds breathes fresh life into active management.

The Federal Reserve disappointed many market participants when it didn't lower interest rates last month and President Trump recently named a successor to Jerome Powell. Suffice to say, there's a lot going on at the central bank.

During a recent interview, Paul Baiocchi, head of fund sales and strategy at SS&C ALPS Advisors, explained why thematic ETFs and active fixed income are experiencing renewed interest as investors look beyond the Magnificent Seven's dominance.

Investors relying on passive bond index funds may find their portfolios too rigid to handle 2026's uncertain interest rate environment, according to Morningstar's latest 2026 market outlook.

Biotech and natural resources funds led the ALPS ETFs lineup in 2025, with both strategies delivering returns above 45%, according to ETF Database. The ALPS Medical Breakthroughs ETF (SBIO) gained just over 57% through December 23, topping all ALPS products for the year, according to ETF Database.

Biotech and natural resources funds led the ALPS ETFs lineup in 2025, with both strategies delivering returns above 45%, according to ETF Database. The ALPS Medical Breakthroughs ETF (SBIO) gained just over 57% through December 23, topping all ALPS products for the year, according to ETF Database.

An actively managed bond fund from SS&C ALPS Advisors has attracted close to $1 billion in net inflows over the past year as investors position portfolios for an environment where security selection could provide an advantage over passive index tracking.

The marriage of active management and fixed income ETFs is garnering increasing attention. Rightfully so: the bond ETF wrapper is seen as breathing new life (and assets) into actively managed products.

The central question facing investors heading into 2026 is whether market performance will finally extend beyond the handful of megacap technology companies that have dominated returns for the past three years.