The Federal Reserve's decision to hold interest rates steady at its October meeting was not unanimous, with two officials preferring a quarter-point increase. According to a press release distributed via NEWMEDIAWIRE, the majority argued that holding rates steady was necessary to assess the cumulative impact of past hikes, while dissenters contended that raising rates is needed to combat persistent inflation. The pause left the benchmark federal funds rate in a target range of 3.75% to 4.00%, but many economists and investors expect the Fed to continue raising rates in the coming months.
Investors and economists expect a quarter-point increase at the December meeting, though forecasts for 2027 diverge, with some projecting increases and others rate cuts. This uncertainty creates volatility in the markets and headaches for income-seeking investors in passive mutual funds and ETFs, which cannot react quickly to Fed-driven market movements.
That dynamic is driving interest in actively managed ETFs, which allow managers to adjust duration, credit quality and sector exposure in real time without being locked into a passive index. For income-focused investors, having a fund manager who can take advantage of opportunities may help protect capital during downturns and capture higher yields when the rate environment changes.
One fund that may benefit from this trend is the Infrastructure Capital Bond Income ETF (NYSE: BNDS), an actively managed ETF whose primary objective is to maximize income, with a secondary objective of capital appreciation. BNDS aims to achieve this by investing at least 80% of its total assets in fixed-income securities, mostly corporate bonds, with a focus on sectors and issuers that feature strong cash flows and pricing power. The management team uses a flexible mix of quantitative and qualitative analysis to evaluate relative value opportunities across fixed-income markets, then applies fundamental analysis to issuers, reviewing enterprise value, capital ratios and operating metrics to determine financial health and ability to service debt.
BNDS is run by Jay D. Hatfield, founder, CEO and portfolio manager of Infrastructure Capital Advisors, who brings nearly three decades of experience across investment banking, hedge fund management and portfolio construction. Before launching Infrastructure Capital, he co-founded NGL Energy Partners and managed income-oriented portfolios at SAC Capital (now Point72) and Zimmer Lucas Partners. For BNDS, this translates into a disciplined approach to corporate bond selection, combined with tactical enhancements like option writing to enhance income.
The fund's active approach stands in contrast to passive strategies that cannot capitalize on movements prompted by Fed action. As the press release notes, the content was originally published on Benzinga and contains sponsored content. Investors should consider the investment objectives, risks, charges and expenses carefully before investing; a prospectus with this and other information about the Fund is available here. Investing involves risk, including possible loss of principal, and increases in interest rates typically lower the value of debt securities held by the Fund.
