Any investors who thought the Federal Reserve’s fight against inflation was entering its autumn years were, unfortunately, definitively proven wrong in March.
Inflation has already proven to be a bit stickier than some expected, and following the escalation of conflict in the Middle East, rising oil and gas prices have added more fuel to the fire. March’s CPI report showed that the key inflation index rose by 0.9% within the month of March alone. This means the annual inflation rate, as of the report date, is 3.3%.
As one might expect, energy prices played a key role in the rapid rise in data. The report notes that energy costs increased by 10.9% in March alone, thus representing a significant driver behind the surge in inflation.
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The threat of inflation rearing its head once again may make the Federal Reserve rethink its rate-cutting regimen. Of course, shifting Fed policy, along with the potential for rising inflation, can have a direct effect on one’s fixed income portfolio.
Situations like these occur when actively managed fixed income funds can actually offer a potent use case. They can be more dynamic and flexible, adapting to changing market conditions and helping portfolios stay ahead of the game.
There are plenty of different routes for tapping into active fixed income, but the BNY Mellon Active Core Bond ETF (BKFI) could offer a particularly effective use case as an active core alternative. This fund employs a proprietary credit research process to evaluate industries, sectors, and individual securities within the fixed income sector. BKFI’s portfolio team employs a fundamental analysis process to evaluate relative value across sectors and securities, exploiting pricing inefficiencies.
As of May 4, 2026, BKFI is providing a subsidized 30-day SEC yield of 4.50%. Combined with the offensive and defensive flexibility that active management brings to the table, this makes BKFI a valuable choice as a potential core holding in a fixed income portfolio.
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For those looking to augment their municipal bond portfolio with active management, the BNY Mellon Municipal Opportunities ETF (BMOP) may be able to assist. True to its name, BMOP leverages its active management to seek out inefficiencies and opportunities within the municipal bond market.
BMOP strategically applies a fundamental credit analysis to evaluate securities and sectors alike, in order to take advantage of different pricing inefficiencies. Furthermore, while at least 50% of BMOP’s portfolio will sit in investment grade munis, up to 50% of the fund’s net assets can be allocated towards high yield alternatives. Notably, the fund’s active management, fundamental analysis, and investment grade allocations can help mitigate much of the risk one normally associates with high yield fixed income.
Despite municipal bonds having a rough March, BMOP is still offering good yield, showcasing the strength of both the fund’s approach and the advantages of active management. As of May 4, 2026, BMOP has a subsidized 30-day SEC yield of 3.87%.
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