Bond funds delivered modest results last year, with the average fund returning 4.8%, though nearly all finished in positive territory. Surprisingly, high-yield and emerging-market bond funds dominated the top performers, buoyed by strong global growth and favorable currency trends despite an inverted yield curve. 

Their outperformance suggests a speculative tone in markets, as riskier assets typically lag when investors grow cautious about the economy. However, higher volatility weighed on their ratings, leaving most of the top 20 funds with only “hold” grades, except for Delaware Pooled Trust High-Yield, which earned a B-minus.

In contrast, lagging funds saw declines in principal value, weak dividend payments, and overall “sell” ratings, with inflation-protected funds failing to meet expectations. 

Finsum: The divide highlights how chasing yield in riskier segments delivered gains last year, while traditionally safer strategies struggled to keep up.

Small cap growth stocks have rallied sharply since April 8, with the Russell 2000 Growth Index up 34.2%, but large cap growth stocks still outpaced them with a 40.5% gain over the same period. Over the past decade, small growth stocks have significantly lagged large growth, delivering less than half the return. 

Research shows that active management has historically outperformed the Russell 2000 Growth Index, though recent rebounds have favored the passive benchmark as high-beta and unprofitable companies surged. 

Sector and industry standouts in small growth include materials, industrials, technology, and niche firms such as Credo Technology and Joby Aviation, with many of the highest returns concentrated in the most volatile stocks. Active small cap growth funds typically avoid the riskiest and least profitable names, which hurt short-term performance but aligns with evidence that profitable small caps outperform over time. 

Finsum: Active strategies may still offer investors a more resilient path within small growth equities despite the recent rally.

High-yield dividend opportunities are harder to find in today’s market, but Realty Income, Healthpeak Properties, and Pfizer all stand out with payouts above 5%. 

1. Realty Income, a net lease REIT, offers a 5.5% yield and decades of consistent growth, supported by a vast property portfolio and international expansion potential. 
2. Healthpeak Properties, which merged with Physicians Realty last year, now provides a 6.8% yield as demand for lab space stabilizes and medical office buildings strengthen its base.
3. Pfizer shares have fallen about 60% since their pandemic peak, but the company has raised its dividend for 16 consecutive years and now yields 6.9%. While looming patent cliffs pose risks, Pfizer has invested heavily in acquisitions that could add $20 billion in annual sales by 2030. 

Finsum: Collectively, these three dividend payers offer compelling income opportunities with the potential for steady long-term growth.

Municipal bonds are drawing increased attention as investors seek stability amid equity market uncertainty, with recent volatility making tax-exempt yields more attractive on both an absolute and relative basis. Despite negative year-to-date returns across much of the muni market, relative valuations compared to taxable fixed income suggest excess return potential ahead. 

Longer duration exposure gives munis sensitivity to interest rate changes, and if the Federal Reserve moves toward cuts later this year, investors could benefit from both quality and yield opportunities. 

American Century offers strategies like TAXF and CATF that combine diversification, credit research, and active management, while also providing tax efficiency within an ETF wrapper. For California investors in particular, CATF can deliver taxable-equivalent yields above 8%, highlighting the value of tax-exempt strategies in high-bracket states. 

Finsum: Active management adds further advantages, including the ability to navigate sectors and credit qualities excluded from passive indexes.

Faith-based investing is gaining momentum as an alternative to ESG, with Christian financial firm GuideStone noting a surge in demand over the past three years. Will Lofland, GuideStone’s Head of Investments Distribution, explained that many investors began seeking values-aligned strategies during the COVID era, when intentional living and faith-driven financial decisions gained traction. 

Unlike ESG, which often emphasizes broad social agendas, faith-based investing focuses on applying Christian principles to business practices, from employee treatment to product integrity. 

Younger investors have been early adopters, but GuideStone reports growing interest among baby boomers, who hold a significant share of wealth. Lofland stressed that faith-based investing is not about driving social change but encouraging companies to concentrate on core business excellence while adhering to ethical standards. 

Finsum: With rising interest across generations, the strategy is emerging as a powerful opportunity for advisor when pitching clients in the broader investment landscape.

Passive investment strategies such as ETFs and index-tracking mutual funds have grown rapidly over the past decade, offering low-cost and tax-efficient exposure to broad markets. However, these vehicles are not always as straightforward as they seem, with three common misperceptions shaping investor decisions according to JPMorgan. 

First, passive funds may not perfectly mirror their benchmark indices due to regulatory constraints and concentration limits, which can lead to performance differences, particularly in sectors dominated by a handful of large-cap stocks. Second, while often inexpensive, specialized passive funds can carry higher expense ratios than expected, in some cases rivaling or exceeding actively managed alternatives. 

Third, passive ETFs are not universally tax efficient, as separately managed accounts can provide greater flexibility through tax-loss harvesting and charitable gifting strategies. 

Finsum: Understanding the nuances of passive investing is critical for aligning portfolios with long-term wealth goals and ensuring fees, exposures, and tax strategies fit the investor’s broader financial plan.

Amid inflationary pressures and monetary uncertainty, investors have increasingly turned to short-duration U.S. Treasury bonds to protect income and reduce interest rate risk. With maturities under five years, these bonds are less sensitive to rate hikes than longer-term securities, making them a defensive yet reliable option in volatile markets. 

The narrow yield spread between the 10-year and 2-year Treasuries highlights how long-term bonds are more exposed to macroeconomic swings, while short-duration bonds remain anchored to Fed policy. 

Active management has further boosted performance, with funds like the Calvert Short Duration Income Fund (CDSRX) and iShares Short Duration Bond Active ETF (NEAR) outperforming peers by tactically adjusting credit quality and duration. Recent results show that actively managed short-duration funds have not only delivered weekly gains but also produced strong risk-adjusted returns, particularly in high-yield segments. 

Finsum: As the Fed holds a cautious stance on rate cuts, short-duration strategies stand out as both an income generator and a stabilizer within diversified portfolios.

Midcap stocks are emerging as a compelling option for investors seeking balance in the current U.S. market environment, offering a middle ground between the stability of large-caps and the growth potential—but higher volatility—of small-caps. 

Midcaps, by contrast, combine growth opportunities with resiliency and adaptability, making them well-suited for uncertain conditions in 2025. One core strategy gaining traction is the BNY Mellon US Mid Cap Core Equity ETF (BKMC), which tracks the Solactive GBS United States 400 Index TR. 

BKMC delivers broad diversification by investing in 400 midcap companies, including REITs, with no single holding exceeding 1% of portfolio weight. As of July 31, 2025, the ETF has returned nearly 12% over the prior three months, underscoring midcaps’ potential to deliver both near-term performance and long-term stability.

Finsum: While large-caps provide scale to weather tariff and policy headwinds, they face concentration risks and reduced flexibility, whereas small-caps remain vulnerable to inflation and Federal Reserve policy shifts.

A new survey from Edward Jones and Morning Consult finds that despite the tax benefits and flexibility of 529 education savings plans, more than half of Americans (52%) don’t know what they are. Only 14% of respondents currently use or plan to use a 529 plan, suggesting that lack of awareness is a major barrier to adoption. 

These plans allow tax-deferred investment growth and can be used not only for college but also for K-12 expenses, apprenticeships, and even student loan repayment, though most respondents were unaware of these options. Financial advisors at Edward Jones stressed the need for more education, noting that advisors can play a critical role in helping families align 529 strategies with broader financial goals. 

The findings come as higher education continues to demonstrate strong long-term value, with college graduates earning about 80% more than those with only a high school diploma, according to the TIAA Institute and Bureau of Labor data. 

Finsum: With more than half of U.S. jobs projected to require a degree by 2031, raising awareness of 529 plans could be vital in helping families prepare for future education costs.

Defined outcome exchange-traded funds (ETFs), particularly buffer strategies, have grown in popularity as investors seek ways to manage volatility and reduce downside risk in uncertain markets. These ETFs cap upside potential in exchange for a defined buffer against losses, typically over a 12-month period, allowing investors to stay invested while limiting risk exposure. 

While the trade-off of reduced upside may not appeal to long-term growth investors, recent innovations such as bitcoin-protected ETFs have expanded the reach of these products, offering cautious entry points into riskier assets. 

The market for defined outcome ETFs has expanded rapidly, now exceeding 400 funds with more than $70 billion in assets and $8 billion in net inflows year-to-date. Innovator and First Trust dominate the space, accounting for more than 90% of assets under management, though new entrants like AllianzIM and Calamos are gaining ground with differentiated strategies. 

Finsum: Defined outcome ETFs have evolved from a niche product into a mainstream risk management tool, reflecting rising investor demand and ongoing product innovation.