New Bond ETF Aims For High Income Through Flexible Multi-Asset Strategy

The Infrastructure Capital Bond Income ETF (BNDS) is a new player in the fixed-income space, launched on Jan. 15, 2025, with a unique approach to generating high current income and capital growth. BNDS differentiates itself from traditional bond ETFs by employing a flexible multi-asset strategy that allows it to invest in a diverse mix of assets, including corporate bonds, municipal bonds, government bonds, equities, options, and swaps.



BNDS's strategy is all about spotting undervalued opportunities in the fixed income market. The team at Infrastructure Capital uses a proprietary multifactor approach that considers everything from credit and liquidity premiums to sector trends. They also keep an eye on the big picture, using a top-down view of the economy to guide decisions. This comprehensive approach enables BNDS to identify bonds that offer attractive yields relative to their risk profile.

One of the key advantages of BNDS's flexible multi-asset strategy is its ability to adapt to changing market conditions. By investing in a broad range of assets, the fund can capitalize on opportunities across different asset classes. This flexibility allows BNDS to adjust its portfolio composition based on the team's proprietary multifactor approach, ensuring that it remains well-positioned to generate both alpha and compelling income for investors.



BNDS's approach to income generation is another standout feature. Up to 20% of the fund's assets can be allocated to equities, with a focus on preferred stocks. These investments provide a steady stream of income in the form of dividends, contributing to the fund's high current income objective. Additionally, BNDS uses options and swaps to manage risk and generate extra income. By writing covered calls or cash-secured puts, the fund can collect option premiums, which further boosts its income. This strategy can also help to offset any losses incurred from declines in the underlying securities.



BNDS's risk management strategies are equally impressive. The fund uses options to hedge against potential losses in the portfolio. For example, BNDS might use put options to protect against a decline in the value of its equity holdings. If the underlying stock price falls, the put option can be exercised, limiting the fund's losses. Additionally, BNDS engages in swaps to manage risk and generate extra income. Swaps allow the fund to exchange one security's cash flows for another's, enabling it to optimize its income and risk profile.



BNDS's flexible multi-asset strategy offers investors several advantages, including high current income, capital growth, risk management, and adaptability to market conditions. By investing in a diverse mix of assets and employing a proprietary multifactor approach, BNDS can generate both alpha and compelling income for investors. As the latest addition to Infrastructure Capital's growing lineup, BNDS is poised to help investors find reliable income in today's markets.