Rethink cash and income with bond ETFs

Cash has played an important role in helping investors navigate uncertainty. With higher rates, it has offered a source of income while keeping capital readily accessible. 

But one key feature of cash is that its returns can change quickly. As interest rates move lower, the income from cash tends to adjust downward relatively fast.

At the same time, staying in cash may mean missing other sources of potential income or return in a changing market. 

Today, as the chart shows, many bonds are offering higher yields than cash. This highlights the potential income trade-off of staying fully in cash. 

Not all income is equal. Investors can generate income through stocks, bonds, and options overlays, each with different drivers and risks. Bonds typically sit toward the lower risk end of the income spectrum compared to stocks, as they generally provide regular and fixed income payments in the form of bond coupons. 

Within bonds, the opportunity set has also broadened. Today's bond ETFs can provide access to a wider range of opportunities, helping investors move beyond core bonds, such as pure government debt and corporate bonds, to manage risk and seek higher yield. 

This broader toolkit can support a more balanced income approach. Investors may benefit from combining core bonds and 'plus' sectors, such as high-yield credit, securitized assets and emerging market debt. 

At the same time, bond ETFs themselves continue to evolve. Recent innovations have brought more choice for investors, including active and outcome ETFs that can help target specific goals, such as higher quality income or enhanced income potential. 

Investing is becoming more sophisticated, but it doesn't have to become more complicated. Many investors are trying to balance three key things at once: earning income, managing risk, and staying flexible enough to adapt as markets change. 

If you’re holding cash, it may feel safe and stable — but the trade-off is becoming more important. Cash can offer certainty today, but it may limit your ability to earn higher income over time. 

Moving beyond cash can open more income opportunities, but higher yields are only part of the picture. It’s just as important to understand where that income comes from and the risks behind it. 

Investment options are also becoming more complex. Beyond traditional investments, there are now many options — from thematic strategies to private markets. With more choices comes a greater need for a strong, dependable core. 

Bond ETFs offer one way to help fill that gap — providing income, diversification, and flexibility in a single investment, making it easier to build a more balanced portfolio.