Monthly-Paying NBI ETFs: A Strategic Play for Income in a Shifting Yield Landscape

In an era where central banks are recalibrating monetary policy and inflation remains a persistent shadow, income-focused investors are increasingly turning to fixed-income ETFs that offer both yield stability and diversification. Among the most compelling options are the monthly-paying ETFs from National Bank Investments (NBI), including the NBI Unconstrained Fixed Income ETF (NUBF), the NBI Sustainable Canadian Bond ETF (NSCB), and the NBI Sustainable Canadian Short Term Bond ETF (NSSB). These funds stand out not only for their consistent distribution schedules but also for their unique positioning in a volatile yield environment.

The Case for NUBF: Global Exposure and Yield Resilience

The NBI Unconstrained Fixed Income ETF (NUBF) is a standout for investors seeking a blend of global diversification and income. As of July 2025, NUBF's forward dividend yield of 4.74% (as of August 15) reflects its ability to generate returns even in a market where traditional fixed-income assets struggle. The fund's portfolio includes a mix of long-dated government and mortgage-backed securities, interest rate swaps, and credit default swaps, giving it a moderate to long-term duration profile.

While NUBF's July 2025 distribution of $0.0850 per unit marked a 6.25% decline from June, its three-year average dividend growth rate of 30% underscores its resilience. This volatility is inherent in an unconstrained strategy that seeks to capitalize on global opportunities, but it also highlights the fund's adaptability in shifting markets. For investors willing to tolerate short-term fluctuations, NUBF's 0.75% expense ratio is competitive, especially given its access to a broad universe of fixed-income instruments.

NSCB and NSSB: Sustainable Income with ESG Alignment

For investors prioritizing sustainability, the NBI Sustainable Canadian Bond ETF (NSCB) and NBI Sustainable Canadian Short Term Bond ETF (NSSB) offer compelling alternatives. NSCB, with a July 2025 distribution of $0.0550 per unit, and NSSB, distributing $0.0260 per unit, both provide monthly income while adhering to ESG criteria. These funds exclude sectors like fossil fuels, tobacco, and firearms, aligning with the growing demand for responsible investing.

NSCB's gross expense ratio of 0.55% (net 0.40%) is particularly attractive, especially when compared to NUBF's 0.75% fee. This cost efficiency, combined with its focus on Canadian corporate bonds rated BBB- or higher, positions NSCB as a low-risk, high-conviction option for income seekers. Meanwhile, NSSB's shorter duration—implied by its name and focus on short-term bonds—makes it less sensitive to interest rate swings, offering a buffer in a rising-rate environment.

Diversification and Risk Mitigation

The trio of NBI ETFs provides a layered approach to diversification. NUBF's global, long-duration exposure contrasts with NSCB and NSSB's Canadian-centric, shorter-duration strategies. This mix allows investors to hedge against macroeconomic uncertainties, such as currency fluctuations or regional economic downturns. For example, while NUBF's performance may lag in a global bond selloff, NSCB and NSSB's domestic focus could offer stability.

Moreover, the monthly distribution structure of all three ETFs ensures a predictable income stream, a critical feature in a world where dividend cuts and bond defaults are more common. The July 2025 distributions for NUBF, NSCB, and NSSB were paid on July 31, with ex-dividend dates on July 24, reflecting a disciplined payout schedule.

Strategic Allocation in a Volatile Market

To build a resilient income portfolio, consider the following allocation:
- NUBF (40%): For its high yield and global diversification.
- NSCB (30%): To anchor the portfolio with sustainable, low-cost Canadian bonds.
- NSSB (30%): As a short-term buffer against rate hikes.

This mix balances growth, stability, and ESG alignment. Investors should monitor NUBF's distribution trends closely, as its unconstrained strategy may lead to further volatility. For NSCB and NSSB, the key metrics to watch are their duration metrics and the sustainability of their yields.

Final Thoughts

In a world where yields are no longer guaranteed, the NBI ETFs offer a roadmap for income generation. NUBF's global reach and NSCB/NSSB's ESG focus create a portfolio that's both diversified and aligned with long-term trends. While no strategy is immune to market risks, the combination of monthly distributions, competitive fees, and strategic diversification makes these ETFs a compelling case for investors seeking reliable cash flow in uncertain times.