As is the case in seemingly every other year, advisors and investors have a slew of choices when it comes to possible contrarian ideas for 2026.
Perhaps surprisingly, bonds are on the lists of some experts, indicating the Neuberger Berman Total Return Bond ETF (NBTR) could be among the ETFs to monitor as 2026 draws closer. Obviously, fixed income is a massive asset class – one of the world’s largest. Still, the idea of bonds and ETFs like NBTR as against-the-grain plays is born more of market participants’ ongoing enthusiasm for growth stocks than of criticism of bonds themselves.
That enthusiasm is likely to carry over into the new year, but investors shouldn’t ignore bonds and ETFs like NBTR, as portfolio diversification is essential, and bonds can help reduce portfolio volatility. Those are among the reasons this ETF, contrarian or not, is worth considering in 2026.
NBTR Could Be Better Than Expected
No, NBTR won’t match the performances of seductive corners of the equity market. Still, as an actively managed fund, it could position investors for better returns in 2026 than what they’d earn with passive pure beta equivalents. That’d be a positive at a time when many market participants worry about subpar fixed income returns.
“Bonds get a lot of bad press, but fixed-income investors have done well over the past three years. After the disaster of 2022, when yields spiked amid rising inflation, fixed income has found its footing. The Morningstar US Core Bond Index has logged an average annual return of more than 4% since late 2022. Its current yield of 4.25% is well above the inflation rate,” notes Morningstar’s Dan Lefkovitz.
Another advantage offered by NBTR is its weighted average duration of 5.87 years, which makes it an intermediate-term fund. Historically, that category of bonds has offered superior diversification in equity-heavy portfolios.
Additionally, the current environment of a weakening dollar and expected Federal Reserve monetary easing – two rate cuts are expected next year – could be conducive to owning intermediate-term bonds and ETFs like NBTR.
“What does the future hold for fixed-income investing, according to my research and investment colleagues? The ‘sweet spot,’ in their view, is intermediate-term bonds,” adds Lefkovitz. “They see longer maturities as ‘more vulnerable to shifts in interest rates, credit risk, and relative-value dynamics across other fixed-income instruments.’ Tight credit spreads make them wary of high-yield, but they see opportunity in local-currency emerging-market debt. Further dollar weakening would boost that asset class.”
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