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As the Federal Reserve begins cutting rates, investors are once again asking an important question. Where can I find income today? For the past few years, higher yields were relatively easy to find. But as rates decline, traditional income sources are starting to compress. That's leading many investors to look beyond the usual areas, exploring alternative corners of the market that can help keep portfolios productive.
Income has always played a critical role in long-term investing, not only as a source of cash flow, but also as a stabilizer of total return. In today's environment, that role is more central than ever. As interest rates fall and bond yields move lower, investors are realizing that the window to lock in attractive yields may begin to narrow.
The question isn't whether income matters, it's where to find it next. And increasingly, that means looking to areas that offer yield beyond just traditional bonds.
Factors Impacting Today’s Income Investing Environment
Several factors are shaping where investors are finding income today.
First, falling policy rates tend to result in lower yields across government and corporate bonds, driving investors to consider new sources of income that are less directly tied to central bank policy.
Second, as markets transition from a high rate to a lower rate environment, demand for income-oriented assets often increases, which can push yields on traditional instruments even lower.
And finally, diversification always matters. Not all yield sources behave the same way. Sectors like private credit, real estate, and preferred securities each respond differently as rates and market conditions evolve. Blending these sources can help investors maintain attractive income while balancing risk across sectors.
BIZD | VanEck BDC Income ETF
At VanEck, we've built a suite of income-focused ETFs designed to give investors access to diverse sources of efficiently and transparently. Three stand out in today's environment.
First, the VanEck BDC Income ETF, ticker BIZD, BIZD. Business development companies or BDCs, a key part of the private credit market, BDCs lend to small and mid-sized US businesses earning income through interest and fees on those loans. This structure allows them to distribute a large share of their earnings directly to investors, often resulting in deals that are among the highest in the income universe. BIZD provides diversified access to these income generating companies through a single liquid ETF offering exposure to private credit's yield potential without the complexity of selecting individual BDCs.
MORT | VanEck Mortgage REIT Income ETF
Next, the VanEck Mortgage REIT Income ETF, ticker MORT, or MORT. Mortgage REITs invest in portfolios of mortgage-backed assets and earn income from the difference between the rates they pay to borrow and the rates they receive on their investments. That spread can create substantial cash flow, which is typically passed on to investors through dividends.
MORT captures this high yield potential by offering diversified access to US mortgage REITs in a single ETF.
PFXF | VanEck Preferred Securities ex Financials ETF
And finally, the VanEck Preferred Securities ex Financials ETF, ticker PFXF. Preferred Securities occupy a unique place between stocks and bonds. They typically pay higher coupons than traditional bonds while ranking senior to common equity. However, most of the preferred market is dominated by financial issuers, such as banks and insurers, leaving many preferred strategies heavily concentrated in this one sector.
PFXF takes a different approach by excluding those financial issuers altogether. It instead focuses on other areas of the preferreds market like utilities, REITs, and industrial companies, where yields remain elevated and diversification is broader.
For investors seeking attractive income with reduced sector concentration, PFXF offers a compelling alternative within the preferred space.
Together, these three ETFs provide exposure to complementary sources of yield, from private credit and real estate financing to hybrid corporate securities, all designed to help investors stay positioned for income in today's evolving rate environment.
As the rate environment shifts, the search for yield is evolving, but opportunity remains. By combining diversified sources of income, investors can stay positioned for today while preparing for what comes next.
VanEck's income ETFs, BIZD, MORT, and PFXF offer efficient and transparent access to some of the market's most compelling income opportunities.
To learn more about these funds and explore additional market insights, visit VanEck.com.
IMPORTANT DISCLOSURES
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
There are inherent risks with fixed income investing. These risks may include interest rate, call, credit, market, inflation, government policy, liquidity, or junk bond. When interest rates rise, bond prices fall. This risk is heightened with investments in longer duration fixed-income securities and during periods when prevailing interest rates are low or negative.
An investment in the VanEck Preferred Securities ex Financials ETF (PFXF) may be subject to risks which includes, among others, preferred securities, convertible securities, hybrid Securities, foreign securities, credit, interest rate, floating rate, subordinated obligations, REITs, small- and medium-capitalization companies, utilities sector, real estate sector, communication services sector, industrials sector, market, operational, call, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount, liquidity of fund shares, non-diversified, and index-related concentration risks, all of which may adversely affect the Fund. Small- and medium-capitalization companies may be subject to elevated risks.
Business Development Companies (BDCs) generally invest in less mature U.S. private companies or thinly traded U.S. public companies which involve greater risk than well-established publicly-traded companies. While the BDCs that comprise the Index are expected to generate income in the form of dividends, certain BDCs during certain periods of time may not generate such income. The Fund will indirectly bear its proportionate share of any management fees and other operating expenses incurred by the BDCs and of any performance-based or incentive fees payable by the BDCs in which it invests, in addition to the expenses paid by the Fund. A BDC’s incentive fee may be very high, vary from year to year and be payable even if the value of the BDC’s portfolio declines in a given time period. Incentive fees may create an incentive for a BDC’s manager to make investments that are risky or more speculative than would be the case in the absence of such compensation arrangements, and may also encourage the BDC’s manager to use leverage to increase the return on the BDC’s investments. The use of leverage by BDCs magnifies gains and losses on amounts invested and increases the risks associated with investing in BDCs. A BDC may make investments with a larger amount of risk of volatility and loss of principal than other investment options and may also be highly speculative and aggressive. The Fund and its affiliates may not own in excess of 25% of a BDC's outstanding voting securities which may limit the Fund's ability to fully replicate its index.
An investment in the VanEck BDC Income ETF (BIZD) may be subject to risks which include, among others, investing in BDCs, investment restrictions, financial sector, small- and medium-capitalization companies, equity securities, derivatives, derivatives counterparty, liquidity risk related to swap agreements, floating rate risk for BDCs, market, operational, regulatory, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, issuer-specific changes, and index-related concentration risks, all of which may adversely affect the fund. Small- and medium-capitalization companies may be subject to elevated risks.
An investment in the VanEck Mortgage REIT Income ETF (MORT) may be subject to risks which includes, among others,mortgage REITs, equity securities, financials sector, small- and medium-capitalization companies, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, issuer-specific changes, non-diversified, and index-related concentration risks, all of which may adversely affect the Fund. Small- and medium-capitalization companies may be subject to elevated risks. Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
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