In an era where central banks are tightening monetary policy to combat inflation, bond investors face a paradox: rising interest rates erode bond prices but also offer the allure of higher yields. For those navigating this shifting landscape, actively managed bond ETFs have emerged as a compelling alternative to passive strategies. Among them, the JPMorgan Core Plus Bond ETF (JCPB) distinguishes itself through a disciplined approach to yield generation, diversification, and risk management.

A Strategic Balance of Yield and Risk

JCPB’s investment process is rooted in a hybrid model that combines macroeconomic insights with granular security selection. The fund’s lead managers—Kay Herr, Andrew Norelli, and Priya Misra—leverage JPMorgan’s broader investment research, including quarterly macroeconomic forecasts and weekly sector meetings, to shape portfolio decisions. This top-down approach allows the team to adjust duration, sector allocations, and credit risk in real time. For instance, in 2024, the fund reduced Treasuries exposure from 38% of assets to 24%, favoring higher-yielding sectors like agency mortgage-backed securities (MBS), asset-backed securities (ABS), and investment-grade corporates. This shift not only enhanced yield but also positioned the portfolio to benefit from relative value opportunities in a rising rate environment.

The fund’s ability to adapt is underscored by its performance. Through September 2024, JCPB delivered a trailing 12-month return of 9.5%, outperforming both the Bloomberg US Aggregate Bond Index (1.9%) and its peer median (2.3%). This outperformance was driven by strategic duration adjustments, such as shortening the portfolio’s duration by 0.3 years in September 2022 amid inflationary pressures. By maintaining a duration within 10% of the index’s benchmark, JCPB mitigated interest rate risk while still capturing yield advantages.

Diversification Through Credit and Sector Exposure

JCPB’s portfolio takes calculated credit risks, allocating to non-investment-grade bonds, commercial mortgage-backed securities (CMBS), and asset-backed securities. This approach broadens diversification while enhancing returns. For example, the fund increased its allocation to BBB-rated corporate bonds to 15% in 2021 from 8% in 2020, capitalizing on attractive valuations despite the higher-quality benchmark. This flexibility has allowed JCPB to generate alpha during periods of market stress, such as the 2022 first quarter and the early stages of the Russia-Ukraine war, where its losses were less severe than its median peer.

Active Risk Management in a Volatile Climate

While JCPB embraces credit risk, it remains disciplined in managing interest rate exposure. The fund’s average weighted maturity typically ranges between five and twenty years, and its 80% minimum bond allocation ensures a stable foundation. During the first quarter of 2025, the ETF navigated price fluctuations—closing at $46.96 on August 8, 2025, after distributing a $0.195 dividend—demonstrating resilience amid rate hikes. The team’s cautious macro view also led to a reduction in high-yield exposure to 10% of assets in 2024, prioritizing investment-grade corporates and agency MBS.

Why JCPB Is a Compelling Choice

For investors seeking a balance of yield, diversification, and active risk management, JCPB offers a robust solution. Its collaborative management structure, which integrates macro insights with bottom-up security analysis, enables agile responses to market shifts. The fund’s long-term performance—annualized returns of 2.6% through September 2024 versus the index’s 1.9%—highlights its ability to outperform in both rising and falling rate environments.

Investment Advice

In a world where passive bond strategies may lag in a rising rate environment, JCPB’s active management provides a compelling alternative. Investors should consider allocating to JCPB as part of a diversified fixed-income portfolio, particularly if they seek higher yields without sacrificing risk control. However, as with any actively managed fund, investors should monitor the fund’s expense ratio and management changes—though the recent addition of comanagers has not disrupted its proven process.

In conclusion, JPMorgan Core Plus Bond ETF exemplifies how active management can thrive in a challenging rate environment. By balancing yield-seeking opportunities with disciplined risk management, JCPB offers a strategic edge for investors navigating today’s dynamic markets.