Content and data provided by various third parties and Fidelity − Terms of Use | Help/Glossary
Research > ETFs > ETF / ETP Commentary > 

MFS Brings Signature Bond Mutual Fund Strategies to ETFs

BY | ETF Database
02/11/2025 | 430 VIEWS
Alex Mackey, CFA, co-CIO, fixed income at MFS Investment Management, recently discussed active bond investing at the Q1 2025 Fixed Income Symposium hosted on the VettaFi platform. MFS launched a suite of actively managed ETFs at the end of 2024, three equity ETFs and two bond ETFs. Mackey delved into the strategies underpinning the MFS Active Core Plus Bond ETF (MFSB) and the MFS Active Intermediate Muni Bond ETF (MFSM).“The active ETFs at MFS are in large part a comparable process to our traditional actively managed mutual funds,” Mackey explained.Active Investing Across the Bond MarketplaceMFSB’s strategy falls between the existing MFS Total Return Bond Fund (MRBIX) and the MFS Income Fund (MFIIX). MFSB invests across sectors as well as bond categories. These include investment-grade corporates, high yield, and municipal bonds. It also may invest in securitized and asset-backed securities. “The way the active ETF is positioned today is at the low end of the relative risk-taking tolerance that it exists with, but maintaining a relative spread advantage,” said Mackey. Additionally, the fund managers seek to “clip some coupon or credit carry because we do think that the fundamental underpinnings of the economy are relatively healthy.” MSFB invests mostly in quality, investment-grade bonds, while allocating some of the portfolio to below-investment-grade securities. The management team uses bottom-up analysis when selecting securities, and may apply quantitative screens to analyze risk. They also take into account macro factors when constructing the portfolio. While MSFB may concentrate in a single sector or industry, it seeks to invest primarily across a spectrum of industries. This creates an actively managed, diversified portfolio of bond exposures with an expense ratio of 0.34%.Municipal Bonds Still Benefit from COVID Recovery TrendSimilar to MSRB, the MFS Active Intermediate Muni Bond ETF (MFSM) retains many of the characteristics of an MFS mutual fund. MFS has been investing in municipal bonds for nearly 50 years, and brings a depth of experience to managing the strategy. The fund relies on analysis and research from the firm’s muni team and global fixed income team when constructing the portfolio. The strategy also overcompensates for potential defaults when selecting securities, according to Mackey. “The product has a relatively meaningful overweight to BBB credit,” Mackey explained. “We think that owning BBB credit within the muni domain is a persistent way to generate alpha.” This creates a higher risk portfolio in an environment of relatively constructive fundamentals for municipal bonds, according to Mackey. The category also benefits from the COVID recovery trend that lifted muni bonds in recent years and remains ongoing. Mackey expanded on the strategy, noting that “incremental carry, incremental yield via credit is the way that this vehicle looks to deliver excess returns relative to the bench.” MFSM invests mostly investment grade bonds with a dollar-weighted average effective maturity of three to 10 years. The fund can invest 25% or greater of its assets in muni bonds with similar projects, like housing, education, water, etc. It may also invest significantly in a single or small number of states. Security selection includes bottom-up, fundamental analysis, quantitative screens for risk, and macro considerations. The fund carries an expense ratio of 0.34%. For more news, information, and strategy, visit ETFDB.

More Commentary

Top Active ETF TCAF Adds More Than Half a Billion in 1 Month
BY | ETF Database
04/02/2025 | 43 VIEWS
Sell on the Pop Prospects: April 2 Edition
BY | ETF Database
04/02/2025 | 5 VIEWS
Gold's Rally Continues to Tee Up Opportunities for Miners
BY | ETF Database
04/02/2025 | 44 VIEWS
View more Commentary

Search Commentary

Enter Keyword(s)
Filter Results

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.