In a world where the vast majority of bond funds are conservative, with treasuries and corporates coming to mind, NYLI MacKay Securitized Income ETF (NYSE:SECR), a structured credit ETF that has $150 million in assets under management, is coloring outside the lines.

This ETF provides individual investors a unique window into institutional-quality exposure in residential mortgage-backed securities (RMBS), commercial MBS (CMBS) and asset-backed securities (ABS). And whereas most funds have been fluctuating in the recent market winds, this ETF has not just maintained its balance but danced past the storm, providing robust performance and enticing yield.

We sat down with Zachary Aronson, director and research analyst at MacKay Shields, to take a closer look under the hood. And quite frankly, the engine is anything but standard. The ETF is centered on the knowledge of MacKay Shields, a fixed-income giant with about $140 billion in AUM. The fund was launched in May last year and is managed by a team who lives and works structured credit, and it shows.

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“Securitized products — like MBS, CMBS and ABS — offer compelling yield and diversification characteristics, but they're often underrepresented in traditional bond funds,” said Aronson. “With SECR, we saw an opportunity to bring institutional-caliber structured credit exposure to the ETF space in a format that's accessible to a broader range of investors.

“Many fixed income ETFs are heavily concentrated in Treasuries or corporate credit,” he added, noting that the rationale behind forming SECR was to design a “core bond solution with a securitized backbone that historically has had lower correlation to equities and corporates.”

Why Investors Should Consider SECR

One standout aspect of SECR is active management, a rarity in a market where ETFs often operate on autopilot. And according to Aronson, that's not just a feature — it's the fund's superpower.

"Structured products are incredibly diverse, with complexity that doesn't lend itself well to a rules-based index. Active management lets us be selective — adjusting exposures across sectors, coupons or deal vintages in real time. During volatility, we're not forced to follow an index down — we can shift into higher-quality tranches, move up in capital structure, or lean into mispriced opportunities. That flexibility has been key in managing risk while seeking to capture upside," he said.

Retail investors tend to avoid structured credit just because it sounds very hard and a bit scary. But SECR was made as straightforward as possible. Shedding light on that, Aronson said, “We designed SECR to be a single-ticker solution, so investors don't need to pick and choose between MBS, CMBS or ABS themselves. Ultimately, we want investors to understand why the fund is positioned a certain way and how that ties back to macro trends they're already familiar with —like mortgage rates, consumer credit and commercial real estate.”

And that strategy has been paying off. Amid volatility, SECR hasn't just protected capital, it's generated alpha. Aronson said that leaning into seasoned RMBS securities with compelling yields that are better buffered against an economic recession made that possible. This apart, “underpriced CMBS bonds with a combination of property types behind them, and a diversified basket of ABS bonds with what we view as strong structural protections” were also key factors.

Aronson believes that some real estate collateral in CMBS bonds are incorrectly priced and presents good relative value. He also noted the sector is under stress, which is why SECR actively underwrites the credit on all securities. “We think housing is resilient, especially within seasoned securities where loan-to-value ratios are very low compared to when they were issued,” he added.

On the ABS side — cars, credit cards, etc. — the team is moving with surgical exactness.

“The latest trends show a weakening consumer with delinquencies on the higher end, this drives us to be very specific in deal selection where we can target certain collateral types and potential structural protections. That being said we do not see the consumer being overleveraged to the same extent as the Great Financial Crisis,” Aronson said.

But discussing triggers and the macro events that can reverse the risk-reward ratio, he said, “Fed pivot can be the driver of spread compression and price appreciation — but potentially also macro stress rising, particularly in labor markets. If unemployment meaningfully increases, you will see pressure across consumer ABS and housing assets.” SECR portfolio is constructed for risk management purposes, targeting “downside protection by structure and seasoning, not only yield,” Aronson added.

Security selection and knowledge of the subtle risk in different subsectors sets SECR apart from its traditional bond ETF competitors. Aronson said there can be major inconsistencies in risk within the ABS, CMBS and RMBS sectors. Having full access to the securitized market (not just the liquid names), helps SECR seek value where others may not be looking.

Bottom Line

For investors seeking yield with a differentiated risk profile, SECR provides a compelling, actively managed solution amid uncertain fixed-income markets.

“We consider this is a rare window where securitized credit is offering compelling spread without having to reach far down in quality. We think SECR is a smart way to participate while being thoughtful about risk,” said Aronson.

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Photo: bigjom jom via Shutterstock

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