Key takeaways:

• Selectivity drives higher yield without added volatility.
• Moody’s Analytics models identify undervalued bonds.
• Systematic credit analysis reduces downgrade risk.
• Targeted exposure may enhance income and total return.
• The 30-Day SEC yield is 4.59% for the MIG and 4.73% for MBBB, as of October 31, 2025.

Advisors are navigating a fixed income market unlike any we've seen in more than a decade. Higher yields, persistent inflation, and tighter financial conditions are creating both opportunities and challenges. With high quality corporate bonds offering yields of approximately 4.9%, and BBB corporates offering 5.1%, investors can build income-generating portfolios without venturing into non-investment grade or illiquid corners of the market. But constructing a resilient core still requires selectivity because not all corporate bonds are created equal.

We believe in a smarter approach to corporate credit. One that provides the benefits of income and potential total return, but with discipline and forward-looking risk control. Through the VanEck Moody’s Analytics IG Corporate Bond ETF (MIG) and the VanEck Moody's Analytics BBB Corporate Bond ETF (MBBB), investors can access a data-driven framework that targets bonds offering attractive value relative to their risk while avoiding issuers more likely to face downgrades or defaults.

Traditional credit ratings, while useful, are often slow to reflect changes in fundamentals. Relying solely on them can expose investors to issuers whose credit health may be deteriorating faster than their ratings imply. In this environment, success depends on not just owning investment grade credit, but owning the right investment grade credit.

Deviation from Fair Value Creates Opportunity ‐ Investment Grade Universe

Source: Moody’s Analytics, ICE Data Services and VanEck, as of 10/31/2025. Past performance is no guarantee of future results.

We use Moody’s Analytics’ proprietary credit risk models to assess the fair value of every bond in the U.S. corporate universe. By comparing each bond’s modeled fair value against its market spread, the process identifies securities offering a significant excess spread above what’s required for their underlying risk. In simple terms, it looks out for bonds that the market is overcompensating relative to their true risk profile.

This systematic approach removes subjective bias and focuses on risk-adjusted value. Portfolios tilt toward issuers with stronger fundamentals and away from those that appear overvalued or at higher risk of downgrade. This means exposure to high-quality, attractively valued bonds designed to participate in the income potential of corporate markets while managing downside risk.

Relative Value Not Driven by Only Rating, Size or Maturity

Selected BBB3, >$1 billion Bonds 5 Year Bonds (As of 9/30/2025)

Source: Moody’s Analytics, ICE Data Services and VanEck, as of 10/31/2025. This is not an offer to buy or sell or a solicitation of any offer to buy or sell any of the securities mentioned herein.

Despite recent Fed cuts, the broader environment still points to higher structural long-term yields. For advisors, that means an opportunity to build a core income portfolio with better long-term total return potential. By integrating forward-looking credit analytics into portfolio construction, we aim to turn market dispersion into an advantage, one that may enhance risk-adjusted returns over time.

The result has been portfolios that are both resilient in their focus on high-quality issuers and responsive through systematic, model-driven selection that adapts as conditions evolve. As shown below, a selective approach that invests in the most attractively valued bonds increased return by 0.84% versus the broad corporate market with no additional volatility. The BBB segment increased risk slightly but added an additional 1.20% over the broad market.

Selective Approach Drove Improved Returns: 5Y Risk‐Return

Source: Morningstar Direct, as of 10/31/2025. Past performance is no guarantee of future results. Index performance is not representative of fund performance. It is not possible to invest directly in an index.

Selectivity Adds Value

Below we illustrate how incorporating attractively valued investment grade credit alongside a traditional core bond exposure can improve portfolio characteristics. Replacing a portion of broad investment grade holdings with attractively valued bonds increases yield potential with only a modest impact on duration. For investors willing to assume additional credit risk within the investment grade space, targeted exposure to attractively valued BBB-rated corporates may further enhance total return potential.

Source: ICE Data Services, as of 10/31/25. Core Bonds is represented by the ICE BofA US Broad Market Index, Attractively Valued IG Corps by the MVIS Moody’s Analytics US Investment Grade Corporate Bond Index and Attractively Valued BBB Corps by the MVIS Moody’s Analytics US BBB Corporate Bond Index. Past performance is no guarantee of future results. Index performance is not representative of fund performance. It is not possible to invest directly in an index. See important definitions below.

Today’s bond market rewards precision. Broad exposures may deliver yield, but selective exposures can deliver smarter yield. The VanEck Moody’s Analytics IG Corporate Bond ETF (MIG) and the VanEck Moody’s Analytics BBB Corporate Bond ETF (MBBB) use quantitative credit insight, provided by Moody’s Analytics and used by over 1,000 of the world’s largest banks, asset managers, insurance companies and corporations, to help advisors position client portfolios for today’s evolving fixed income landscape. As of October 31, 2025, MIG’s 30-Day SEC yield is 4.59% and MBBB’s is 4.73%.

To find the latest data and yields for VanEck’s income investing solutions, visit the Income Investing Yield Monitor.

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