The Steady Income Machine: Why AVIG is a Must-Hold for Yield Hunters in 2025

In a world where bond yields are scraping historic lows and income-hungry investors are left scrambling, the Avantis Core Fixed Income ETF (AVIG) stands out as a rare beacon of stability. With a 4.65% SEC yield, a monthly distribution of $0.1701 per share, and a rock-bottom 0.15% expense ratio, AVIG offers a compelling combination of income, cost efficiency, and diversification. For retirees and income seekers, this ETF is a no-brainer—especially as the Federal Reserve's rate hikes continue to squeeze yields elsewhere.

The Yield Advantage: Outperforming in a Low-Yield World

Let's start with the numbers that matter most to income investors. AVIG's SEC yield of 4.65% (as of March 2025) blows past the paltry returns of cash equivalents and short-term Treasuries. Meanwhile, its monthly distribution of $0.1701 per share provides a predictable cash flow—critical for retirees who rely on steady payouts.

Compare this to the broader bond market: The Bloomberg U.S. Aggregate Bond Index, which AVIG tracks closely, yields around 3.5%. AVIG's higher yield isn't a fluke—it's a result of its active management strategy, which tilts toward higher-yielding sectors like corporate credit and securitized assets (e.g., mortgage-backed securities).

The Cost Edge: Why 0.15% Matters

AVIG's 0.15% expense ratio isn't just low—it's a fraction of what most bond ETFs charge. The average core bond ETF sports a 0.30% expense ratio, meaning AVIG saves investors 50% or more in fees annually. Over time, this compounds into significant savings.

For example, on a $100,000 investment, AVIG's fees would cost just $150 per year, while a 0.30% fund would charge $300. Over a decade, that's a $1,500 difference—money that stays in your pocket, not Wall Street's.

Portfolio Diversification: Balancing Risk and Reward

AVIG isn't just about chasing yield—it's about risk management. Its portfolio is split across three key sectors:

1. Credit (64%): Corporate bonds and loans provide the bulk of its income.
2. Government (25%): U.S. Treasuries and agency debt anchor stability.
3. Securitized (19%): Mortgage-backed securities add yield without excessive risk.

This mix avoids overexposure to any single sector. Even its -9% cash allocation (due to open trades) is a testament to its active management, not a red flag.

Track Record: Staying Close to the Benchmark, but Outperforming Costs

AVIG's performance mirrors its benchmark, the Bloomberg U.S. Aggregate Bond Index, but its lower fees give it an edge. Year-to-date through March 2025, AVIG returned 2.72%, nearly matching the index's 2.78%.

Crucially, its Beta of 0.27 means it's far less volatile than the stock market. This makes it a reliable ballast for portfolios during equity downturns.

Why Act Now?

The writing is on the wall: interest rates are unlikely to fall meaningfully anytime soon. In this environment, income seekers need strategies that maximize yield while minimizing costs. AVIG checks both boxes.

• Monthly distributions give you cash flow you can count on.
• Low fees ensure more of your returns stay with you.
• Diversification reduces the risk of sector-specific meltdowns.

Final Verdict: AVIG is a Foundation Holding for Income Portfolios

AVIG isn't a get-rich-quick scheme. It's a foundation holding for investors who want steady income, low fees, and broad diversification. With a 4.65% yield in a 3% world, it's a rare gem.

Act now: Buy AVIG before yields shrink further or fees rise. This ETF isn't just a bond fund—it's a blueprint for smart income investing in 2025.

Data as of June 2025. Past performance does not guarantee future results.