Investigating Multisector Exchange-Traded Funds: Insights and Explanations
In the world of exchange-traded funds (ETFs), multisector bond funds have been making waves, with notable growth and strong performances. These funds, which offer a one-stop shop for investing in a diverse range of debt, have been attracting more and more investors seeking higher yields and a balance between risk and reward.
One of the leading ETFs in the multisector bond category is the JPMorgan Income ETF (JPIE). Managed by Andrew Norelli, JPIE boasts a heavy allocation to residential and commercial mortgage-backed securities, many with government guarantees, representing over half its portfolio. The ETF's average duration is about 2.8 years, making it less sensitive to interest rate changes while delivering returns comparable to high-yield bond funds[1]. JPIE also stands out for its impressive asset growth midyear 2025[2].
Another contender is the Vanguard Multi-Sector Income Bond ETF (VGMS), launched on June 11, 2025. Designed to provide higher yields than U.S. Treasuries through active management across multiple credit sectors, VGMS offers flexibility to rotate among credit sectors based on credit fundamentals and macroeconomic trends, combining top-down and bottom-up investment analysis[4].
Other ETFs appearing in prominent lists for multisector and core bond funds by mid-2025 include PYLD, BINC, JCPB, VCRB, and FBND, alongside JPIE[2]. However, detailed specific performance figures (such as total returns or yield percentages as of May 31, 2025) are not provided in the search results.
The Pimco Multisector Bond Active ETF (PYLD) is another notable fund, already the second-biggest ETF in the category with more than $5 billion in assets. It focuses on government-guaranteed securitized mortgage debt[3].
The iShares Flexible Income Active ETF (BINC), managed by Rick Rieder, BlackRock's global chief investment officer for fixed income, has more than $9 billion in assets. Over one-fourth of its assets are in currency derivative contracts[3].
Multisector bond funds, which invest in a variety of debt types beyond U.S. Treasuries, aim to provide more return than a traditional bond fund, without too much extra volatility. They have been growing rapidly, with nearly half of the ETFs in Morningstar's multisector bond category trading only since the beginning of 2024[3].
The TCW Flexible Income ETF (FLXR), which debuted in June 2024, has more than tripled in size since its conversion, topping $1 billion[1]. Some companies have converted their multisector bond mutual funds into ETFs, bringing along their return history.
Investors need to carefully examine what's in multisector bond funds due to their freedom to invest in various types of debt. For instance, the Hartford Strategic Income ETF (HFSI) has a larger stake in high-yield bonds, emerging-markets debt, and bank loans compared to other funds[1].
In the top 11% of funds in its category, HFSI yields 6.1% and has a one-year return of 8.7%, placing it in the top 11% of funds in the category. Its expense ratio is 0.49%[1]. The TCW Flexible Income ETF (FLXR) yields 5.9% and has a 9.4% one-year return, putting it in the top 4% of its peers[1].
In 2024, these ETFs pulled in almost $13 billion in assets, making multisector bond ETFs one of the fastest-growing ETF categories of the year[1]. Industry experts agree that multisector bond funds are incrementally more risky but offer incrementally more reward[2].
In conclusion, the multisector bond ETF market is thriving, with a variety of funds offering different investment strategies and risk profiles. Whether you're looking for a focus on mortgage-backed securities (like JPIE), active management across multiple sectors (like VGMS), or a balance between risk and reward (like FLXR and HFSI), there's an ETF to suit your needs.
[1] Source: Morningstar [2] Source: InvestmentNews [3] Source: ETF.com [4] Source: Vanguard Investments
- The growth and popularity of multisector bond funds in the ETF market have led to an increase in trading activities, as investors seek possibilities for higher yields and balanced risk rewards.
- With diverse investment strategies available such as focusing on mortgage-backed securities (JPIE), active management across multiple sectors (VGMS), or a balance between risk and reward (FLXR and HFSI), finance professionals can engage in various forms of investing within the multisector bond ETF market.
