🔵FIXT: The Flexible Bond ETF for a Changing Rate World

Welcome to this week's ETF UNO newsletter! If you've been exploring the fixed-income landscape, you may have noticed the impact of changing interest rate expectations and widening credit spreads. This raises an important question: Is a passive bond index still the best core holding for your portfolio?

The TCW Core Plus Bond ETF (FIXT) offers an active core-plus bond solution designed to deliver attractive total returns while remaining benchmark-aware and effectively managing risk. It combines traditional, high-quality bonds with higher-yielding "plus" sectors in a disciplined manner.

Is FIXT the right bond ETF for your portfolio? Let's explore.

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What is FIXT?

Launched in June 2025 through the conversion of TCW's established MetWest Intermediate Bond Fund, FIXT represents a thoughtful evolution in fixed-income ETF design. With an expense ratio of 0.40% and approximately $215 million in assets under management, this actively managed ETF pursues total return through TCW's "opportunistic core plus" approach.

What does "core plus" mean? It refers to the ability to go beyond the foundational Bloomberg U.S. Aggregate Bond Index, which is the standard for core fixed-income investments.

FIXT maintains broad exposure to investment-grade government, agency, and corporate bonds as its stable "core." It also allows strategic investments in higher-yielding sectors, such as non-agency mortgage-backed securities, asset-backed securities, and select below-investment-grade credits, when opportunities arise.

This systematic flexibility matters profoundly in today's environment. While passive bond ETFs must mechanically hold whatever the index dictates—often overweighting the most indebted issuers—FIXT's managers can shift allocations in response to changing market conditions, tilting toward sectors offering superior risk-adjusted returns.

For example:

• 📈When credit spreads widen, and valuations improve → increase exposure to high yield or structured credit

• 🛡️When recession risks rise → reduce riskier sectors and move toward safer bonds

• 🌍When emerging markets strengthen → selectively add EM debt

The result? Potential for enhanced income and total return, albeit with somewhat higher volatility than a pure core bond fund.

FIXT's key strength for investors today is its proactive approach to interest rate risk. Unlike passive funds tied to their benchmarks, FIXT's managers adjust their interest rate sensitivity in line with their economic outlook.

They shorten duration when rates are expected to rise and extend it when the Federal Reserve signals easing to capture price appreciation.

This strategy was vital during the historic rate shock of 2022, when the Bloomberg Aggregate Index suffered its worst calendar-year loss at -13.01%. Funds that could shorten duration ahead of tightening cycles were able to preserve more capital.

FIXT's strategy leverages TCW Group's nearly 50 years of fixed-income expertise. Established in 1971 in Los Angeles, TCW is known for its deep credit research and sector specialisation. Its unique, team-based approach allows specialist groups to provide insights to portfolio managers who make comprehensive allocation decisions. This structure enables FIXT to identify relative-value opportunities that passive funds may miss, such as increasing investments in non-agency mortgage-backed securities (MBS) when spreads widen significantly compared to Treasuries.

Investment Strategy💡

For investors building diversified portfolios, FIXT serves as an ideal substitute for passive core bond exposure. Here are some strategies for implementation:

• 🔄Core Bond Holding Replacement: Replace your traditional aggregate bond ETF allocation with FIXT to maintain similar risk characteristics while gaining the benefits of active management. Due to FIXT's intermediate-duration profile, it integrates naturally with equity allocations in a conventional 60/40 portfolio.

• 💰Income Enhancement Strategy: Combine FIXT with a short-duration ETF to create a barbell structure—utilising the short end for stability and liquidity, while FIXT offers income enhancement and tactical flexibility. Together, these components can create a diversified, income-focused ETF portfolio.

• 🌤️All-Weather Fixed Income Sleeve: For investors seeking a single-bond-fund solution, FIXT's multi-sector flexibility provides diversification across credit types and maturities without requiring multiple ETF purchases.

Given FIXT's active nature, monitor its sector allocations quarterly via TCW's fact sheet. Significant shifts into "plus" sectors (such as high-yield or emerging-market debt) may signal increased risk appetite—useful context for your overall portfolio risk assessment.

FIXT at a glance

ETF Issuer: TCW

Inception: 2025-06-16 (Listing Date)

Asset Class: Fixed-Income

Underlying Index: FIXT is an active ETF

Geographical Focus: Global

Expense Ratio: 0.40% (as of last data point)

Dividend Yield: 3.69% (as of last data point)

Distribution Frequency: Monthly

Historical Performance

Because FIXT converted from a mutual fund in June 2025, its ETF-specific track record remains brief. However, its predecessor fund's performance offers meaningful insight:

• 1-Year Return: +7.78%

• 3-Year Annualised: +4.50%

• 5-Year Annualised: +0.97%

• 10-Year Annualised: +2.26%

• Since Inception: +4.26% (annualised)

These figures reflect a strategy designed for full market cycles—not short-term outperformance. Notice how the 5-year return lags the 10-year figure? That captures the brutal 2022 rate shock period. Yet the strategy's discipline through that drawdown positioned it for stronger recent returns as rates stabilised—a reminder that core plus strategies reward patience.

ETF Radar View

The radar chart below shows the general characteristics of the ETF:

Top 3 Reasons to Invest

1. Active Management at ETF Efficiency: FIXT provides institutional-grade active fixed income management through a transparent, liquid ETF structure, eliminating mutual fund redemption pressures and ensuring daily pricing transparency.

2. Benchmark-Aware Flexibility: Unlike unconstrained bond funds that may venture into speculative territory, FIXT maintains a focus on "benchmark awareness"—anchoring to core fixed income principles while opportunistically enhancing returns. This approach provides reassurance for conservative investors who are cautious of excessive risk-taking.

3. Proven Rate Cycle Navigation: The strategy's 20+ years of history demonstrate its ability to navigate various interest rate environments—from the low-rate era of the 2010s to the drastic repricing in 2022—without significant drawdowns.

Top 3 Reasons Not to Invest

1. Limited Standalone ETF Track Record: Although the underlying strategy has decades of history, FIXT launched in June 2025. Investors who prefer a longer performance record may choose more established active bond ETFs.

2. Moderate Assets Under Management: With approximately $215 million in assets, FIXT falls below the liquidity threshold for mega-cap bond ETFs. While this amount is sufficient for most individual investors, very large allocations may encounter issues with bid-ask spreads.

3. Active Risk ≠ Guaranteed Outperformance: Active management carries the risk of poor decision-making, which may lead to underperformance against the benchmark. In strong bull markets for core bonds, passive funds can outperform active ones.

🧠Active Bonds Made Simple

FIXT isn't a magic bullet. It won't eliminate interest rate risk or guarantee outperformance in every environment. But in a world where passive bond indices mechanically overweight the most indebted issuers and lack flexibility to capitalise on dislocations, FIXT offers something valuable: intentionality.

For ETF investors who've moved beyond basic index investing and seek smarter fixed-income exposure—without venturing into speculative unconstrained strategies—FIXT offers a compelling middle path. It's core bond exposure with a brain: disciplined enough for the foundation of your portfolio, flexible enough to adapt when opportunities emerge.

Are you eager to explore active fixed-income strategies and gain exclusive insights on ETFs? As active ETFs transform the fixed-income landscape, there are growing opportunities to build smarter, more resilient portfolios. Sign up for the ETF UNO newsletter today and help empower the next generation of ETF investors, one actionable insight at a time.

DISCLAIMER: This article is for informational purposes only and should not be considered as investment advice. Always conduct your own research and consult with a financial advisor before making investment decisions.