ETFs

Best Performing Fixed Income ETFs

Cinthia Murphy, Managing Editor, ETF.com

We’ve been living in a tale of two markets this year, one being a resilient U.S. stock market buoyed by the strength of the economy; the other a cautious bond market, faced with dropping yields and rising bond prices and investors expressing some concern about global economic growth.

In this environment where the S&P 500 is delivering double-digit returns and bond funds are also rallying, fixed income instruments caught in the middle are shelling out outsized performance. Funds that own bondlike preferred stocks, stocklike convertible bonds, as well as those focused on high yield, fallen angel, longer-dated corporate bonds are all serving up double-digit gains.

Leading the list of best-performing fixed income ETFs this year is the Virtus InfraCap U.S. Preferred Stock ETF (PFFA), with gains of 19%. The actively managed ETF, which can employ up to 30% leverage for a 1.3x exposure to preferred stocks, focuses on noncallable preferreds for yield currently nearing 7.5%. The fund is still relatively new to market, and traction has been slow, especially given the hefty price tag of 2.1% a year, but the performance has been stellar year-to-date.

Also at the top with gains of more than 12% are the InfraCap REIT Preferred ETF (PFFR), and the VanEckVectors Preferred Securities ex Financials ETF (PFXF). These two ETFs focus on REITs, which, as a sector, have outperformed the S&P 500 handily, to the tune of 4 percentage points this year.

Other niche fixed income segments doing well include convertible bond ETFs—funds that offer the protection of a bond and the upside potential of a stock—such as the SPDR Bloomberg Barclays Convertible Securities ETF (CWB), the First Trust SSI Strategic Convertible Securities ETF (FCVT) and the iShares Convertible Bond ETF (ICVT). Each is up at least 10% year-to-date.

Expectation for low default risk given the strength of the economy has helped corporate bonds as well, especially high yield and longer-dated debt.

The iShares Fallen Angels USD Bond ETF (FALNand the VanEck Vectors Fallen Angel High Yield Bond ETF (ANGLare on the year’s top performers list, as are the iShares 10+ Year Investment Grade Corporate Bond ETF (LLQDand the Vanguard Long-Term Corporate Bond ETF (VCLT), with returns in excess of 8.5% so far in 2019.

If the rate environment remains supportive going forward, and the equity market holds on to its gains, these are pockets of the fixed income universe that could benefit from performance as well as growing investor interest.

Best-Performing Fixed Income ETFs (excluding leveraged/inverse)

Ticker

Fund

YTD Return (%)

PFFA 

Virtus InfraCap U.S. Preferred Stock ETF

19.17

PFFR 

InfraCap REIT Preferred ETF

13.26

XMPT 

VanEck Vectors CEF Municipal Income ETF

12.31

CWB 

SPDR Bloomberg Barclays Convertible Securities ETF

12.19

FCVT

First Trust SSI Strategic Convertible Securities ETF

12.00

EPRF 

Innovator S&P Investment Grade Preferred ETF

11.61

ICVT 

iShares Convertible Bond ETF

11.49

PFXF

VanEck Vectors Preferred Securities ex Financials ETF

11.14

VRP 

Invesco Variable Rate Preferred ETF

10.89

PGX 

Invesco Preferred ETF

10.60

PSK

SPDR Wells Fargo Preferred Stock ETF

10.25

MCEF 

First Trust Municipal CEF Income Opportunity ETF

10.02

FALN 

iShares Fallen Angels USD Bond ETF

9.67

ANGL 

VanEck Vectors Fallen Angel High Yield Bond ETF

9.65

BSJQ 

Invesco BulletShares 2026 High Yield Corporate Bond ETF

9.59

BSJP 

Invesco BulletShares 2025 High Yield Corporate Bond ETF

9.57

LLQD

iShares 10+ Year Investment Grade Corporate Bond ETF

9.53

PFFD 

Global X U.S. Preferred ETF

9.43

HYGV 

FlexShares High Yield Value-Scored Bond Index Fund

9.39

HYUP

Xtrackers High Beta High Yield Bond ETF

9.29

FPE 

First Trust Preferred Securities & Income ETF

9.10

PFF 

iShares Preferred and Income Securities ETF

8.97

HYLS 

First Trust Tactical High Yield ETF

8.94

FLHY 

Franklin Liberty High Yield Corporate ETF

8.76

VCLT 

Vanguard Long-Term Corporate Bond ETF

8.75

Data measures total returns for the YTD period through May 15.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

PFFA PFFR PFXF CWB FCVT FALN ANGL VCLT

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