This is an actively managed bond ETF focused on US securitized credit. It holds a broad mix of asset-backed securities, commercial and residential mortgage bonds, and collateralized loan obligations in pursuit of high current income. It has no benchmark index, and the management team picks securities directly.

It suits investors who want to add a different kind of income source to a bond portfolio built around Treasuries and corporate bonds. It is also useful for those who want monthly cash flow.

It is an ETF run by T. Rowe Price under an active management approach.

It allocates most of its assets to US securitized credit and adjusts weightings by comparing sector spreads and collateral structures. Because it does not follow an index, its credit rating mix and maturity profile change with market conditions. Income is distributed monthly.

• A structure in which the management team selects holdings directly rather than tracking an index
• A collateral-based income source that differs in nature from Treasuries and corporate bonds
• An expense level on the low side among actively managed securitized bond ETFs
• Fully transparent, with holdings disclosed daily

Assets under management (AUM) are $93.4M, and the total expense ratio (Expense Ratio) is 0.20% per year.

As a newly launched product, its trading volume and bid-ask spreads are not as deep as those of large bond ETFs. Limit orders are safer than market orders.

Securitized credit earns its returns from the cash flows of the underlying collateral, so it reacts more sensitively to credit spread movements than to Treasury yields. Because the fund is actively managed, performance depends on its sector allocation decisions.

As the view has spread that Treasuries and high-grade corporate bonds alone do not provide enough income, interest in securitized bonds has grown. However, the fund is still in its early stage, and its asset base remains in the small range.

Income diversification and monthly distributions are its strengths, while the credit risk of the collateral assets and thin trading liquidity are burdens.

There are several options to compare within the same securitized credit category. Products that hold only collateralized loan obligations include JAAA, an ETF focused on the top-rated tranches, and JBBB, which holds the next tier down in credit quality. If you want exposure to mortgages only, you can compare its character with MBB and VMBS, which hold government agency-guaranteed mortgage bonds. Because comparison data within the same classification is still limited, we recommend making your judgment based on asset class and collateral structure.

Here are the items to check before investing. Although it is called a bond ETF, its risk structure differs from Treasury-type products, so you should first look at the nature of the collateral assets and the liquidity.

If delinquency rates on the underlying collateral rise or credit spreads widen, prices come under pressure. Because the fund is small, execution prices can be unfavorable when trading, and since it is actively managed, a misjudgment could leave it below the average of its peer asset class.

It suits use as a supplementary part of the bond allocation to broaden income sources. Rather than using it as a core holding, we recommend keeping Treasuries and high-grade corporate bonds as the base and allocating only a portion to it. Please use limit orders when buying.