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

The Structured Credit Advantage: High Yields, Low Defaults

BY | ETF Database
7:02 am ET 07/17/26 | 6 VIEWS
Considering how complex the macroeconomic picture has become this year, advisors and investors may want to consider any and all portfolio tools available to them. This certainly includes their approach to fixed income exposure, given how the challenges of inflation, new leadership at the Fed, oil prices, and more could affect income approaches of all kinds. Key Takeaways: Inflation, new Fed leadership, and much more is causing many to rethink how they position their fixed income portfolios, but structured credit could offer a good opportunity. Structured credit offers strong historical precedent for lower default rates, while generating compelling yields via complexity premiums. The Guggenheim Securitized Income ETF (GISC) provides disciplined access to a variety of structured credit assets, with the added benefit of active management. One way folks could potentially look to navigate the fixed income market is through structured credit. The tradeable portion of the asset-backed finance market, structured credit encompasses a variety of different securities, including asset-backed securities, collateralized loan obligations, and mortgage-backed securities.  Of course, some may be wondering why structured credit is offering a compelling use case for today’s environment. A major part of this has to do with how structured credit is offering attractive levels of yield that offset the potential risks. This is because, from a historical standpoint, investment-grade structured credit can offer a noticeably lower chance of default than other liquid areas of fixed income, such as corporate bonds.  “Now, this matters, because unlike equities, which could go up or down, bonds generally can only go up a little bit and they can go down a lot,” said Karthik Narayanan, head of structured credit at Guggenheim Investments, in a June episode of the Guggenheim Macro Markets podcast. “So really, as a portfolio manager, what you want to get paid for is grinding out better returns over time and not giving it away very quickly on a few bad positions.” Furthermore, structured credit is a valuable asset for taking advantage of the complexity premium. For the uninitiated, the complexity premium refers to the fact that investors tend to receive more payments because these securities are more difficult to navigate and manage. Active Structured Credit ETFs Offer a Compelling Opportunity SetPut together, structured credit could offer a strong use case in today’s market. Blending lower default with higher income, these instruments, when selected correctly, can provide attractive yields to cushion against macroeconomic uncertainty.  The Guggenheim Securitized Income ETF (GISC) can help investors looking to build up their exposure to structured credit. Seeking out strong yields through complexity premiums, GISC’s active portfolio team selectively pursues instruments from undervalued areas of the credit market. Meanwhile, the fund’s active framework enables it to flexibly readjust its exposures when needed. This sort of approach could certainly pay off as the year progresses. Even if inflation continues to be a potent challenge, the opportunities within structured credit will persist, and active managers with strong track records may be able to capitalize on them.  For more news, information, and analysis, visit the Fixed Income Content Hub.

More Commentary

Single-Country Swagger: Capture Localized Alpha With These ETFs
BY | ETF Database
5:19 am ET 07/17/26 | 14 VIEWS
Active Healthcare Stocks ETF TMED Spiked in 1H
BY | ETF Database
6:43 am ET 07/17/26 | 8 VIEWS
FINA-lly: A New ESG ETF Joins Fidelity ETF Leaderboard
BY | ETF Database
7:34 am ET 07/17/26 | 3 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.