Why are active bond funds attractive when credit spreads are tight?

Tight spreads leave less extra yield for taking credit risk, so price moves can be sharp when sentiment turns. Active managers can reduce lower-quality exposure, shift into higher-quality carry, add liquidity, or raise government bond weight. That flexibility helps protect capital compared with index funds that must hold the entire benchmark through a widening episode.

What makes intermediate-term bonds a good core for Swiss investors?

Intermediate-term bonds balance income with moderate rate risk. In the 5–10 year area, duration is manageable while yields are often better than short paper. This aligns with CHF-based goals for steady returns. Active strategies can fine-tune duration inside that range, adapting as central bank signals and inflation data change.

How should I think about currency hedging for global bond exposure?

For CHF investors, unhedged USD or EUR bonds can add volatility that may not be rewarded. Hedged share classes can stabilise returns relative to the franc. Compare hedge costs and tracking differences, and align hedging with your time horizon. Many investors hedge most core bond exposure while leaving some equity currency risk unhedged.

Do passive bond ETFs still have a role in this environment?

Yes. Passive bond ETFs offer low costs and quick access to markets. The key is position sizing and pairing them with flexible active funds. With spreads tight and yields lower, we prefer a mix that uses active management for credit selection and duration calls, while keeping passive ETFs for efficient, transparent core exposure.

Global Market Insights

January 7: Active Bond Funds Gain as Tight Spreads Test Passive ETFs

ByDanny Kontos January 7, 2026January 7, 2026

Active bond funds are drawing fresh interest on January 7 as tight credit spreads and an uncertain Fed path pressure passive bond ETFs. For Swiss investors, lower starting yields mean less cushion if rates or spreads move against you. Many managers see the 5–10 year area as a practical balance between income and rate risk. We explain why active selection, flexible duration, and currency hedging matter now, and how to build a resilient CHF-based bond allocation.