Less than four months into 2026, we’ve already had a near 10% market drawdown, oil above $100, and plenty of global tensions, the full scope of which is TBD. The market remains resilient, though, having clawed its way up the various walls of worry to fresh all-time highs. All of that aside, what’s really caught our eye amid the volatility is a continued shift in investor behavior—active fixed income ETFs aren’t filler anymore; they’re a core allocation.
Flows and Adoption: Active Fixed Income ETFs Are Accelerating
Investors have already poured $163 billion into fixed income ETFs in 2026, accounting for roughly 30% of total ETF flows. About $62 billion of these flows have been into active strategies, a full-year pace that would top 2025 as the best year on record (Bloomberg, as of 4/17/26).
As flows gain momentum, so does the breadth of offerings. Over the trailing 12 months, more than 110 new active fixed income ETFs were launched, accounting for roughly 70% of all fixed income launches (Bloomberg, as of 4/17/26). Active fixed income ETFs surpassed their passive counterparts last year, quieting previous concerns about limited product choices.
A Long Runway for Growth: ETFs Are What’s Next in Active Fixed Income
In the United States, approximately 70% of all managed assets—mutual funds and ETFs combined—are actively managed (Morningstar, as of 2/28/2026). While active strategies dominate, they represent only 21% of fixed income ETF assets. That’s changing in 2026, with ETFs capturing an outsized share of fixed income inflows relative to mutual funds. Despite being less than half the size of the mutual fund market, ETFs account for 50% of fixed income flows year-to-date (Morningstar, as of 2/28/2026).
ETFs accounted for over 50% of the flows in 2026 but only make up 30% if managed fixed income assets (Guide to ETFs slide 21)
Timely Opportunity: Go Further Out on the Curve with an Active Manager
Ultrashort has been the runaway leader in fixed income flows this year as the easy carry from cash continues to fade. Short-term yields have already rolled over, and with Dr. David Kelly, our Chief Global Strategist, estimating that PCE inflation could reach 3.9% by May, real returns on cash are likely to be slim.
Despite this year’s volatility, credit-sensitive fixed income exposures have outperformed short-term instruments within many allocations. For example, the 1–3 Month Treasury Bill Index has returned 1.09%, versus 1.30% for the High Yield Index (Bloomberg, as of 4/21/26). In our view, this performance gap indicates a meaningful opportunity to move out on the curve and use an active manager to take advantage of dislocations created by volatility.
Spotlight on JFLX: A Diversified, Downside-Focused Fixed Income ETF
The JPMorgan Flexible Debt ETF (JFLX) dynamically invests across all fixed income sectors to capture high-conviction opportunities for long-term total return with a focus on mitigating downside risk.
With markets shifting rapidly, JFLX’s more proactive, downside-focused approach has resonated with investors. Currently, JFLX yields nearly 5% and has delivered more than 75 basis points of alpha over its benchmark this year. See below for more!
- JFLX allows investors to gain diversified exposures to the best ideas coming out of JPMorgan’s $1 trillion fixed income franchise. Some of these best ideas include:
- Higher quality IG corporates with healthy operating margins able to withstand a period of elevated oil prices
- Securitized credit where spreads and all-in yields remain elevated vs corporate credit of similar credit quality
- Emerging market debt focused on countries with high real rates and overweight net energy exporters
- JFLX is dynamic and flexible in both its sector allocations and duration positioning allowing the Fund to take advantage of market opportunities and limit downside risk
- JFLX has a proven, long-term track record of outperforming core fixed income (i.e. the Agg) with less volatility, allowing investors to broaden their investment allocations within a risk controlled ETF vehicle.