Fixed Income Access Vehicles
Written By: Wyck Brown, CFA
In our previous fixed income article, “An Anatomy of the U.S. Fixed Income Market,” we laid out the anatomy of the $73 trillion U.S. fixed income market by starting with the basic building blocks of fixed income investments: bonds and loans backing the various associated sectors such as Treasuries, Munis, Corporates, MBS, and ABS. In this article, we strive to illustrate the relative size and other characteristics of the various access vehicles investors use to gain fixed-income exposure in their portfolios.
The vast majority of investors, including institutional, high-net-worth, and retail investors access their fixed-income exposure through investment funds that aggregate bonds and loans in a diversified fashion within a particular strategy. Common fixed-income strategies target one or more of the sectors listed above and can also zero in on desired credit risk, duration, coupon yield, capital appreciation, total return, etc. Common fund structures used to achieve this exposure are mutual funds, ETFs, interval funds, CITs, SMAs, private partnerships (including fixed-income hedge funds and private credit), etc.
1. Money Market Funds (MMFs)
MMFs serve as the backbone of short‑term liquidity across the financial system. MMFs are used largely as “cash sweep vehicles” in brokerage accounts and as a way to store cash for corporate treasurers.
Typical Sector Investments: US Treasuries and Federal Debt
Estimated AUM: $7.7 T
Estimated Number of Funds: 290
Typical Liquidity Structure: Daily liquidity, T+1 settlement
Typical Fee Structure: % of AUM
2. Mutual Funds
Mutual Funds are one of the most common ways investors access fixed-income markets. Mutual Fund strategies can vary widely. Investors can find access to passive fixed income investments, sector-specific mandates, and opportunistic strategies, among others. Additionally, Mutual Funds may target a variety of duration and credit quality exposures.
Typical Sector Investments: US Treasuries and Federal Debt, Municipal Credit, Public Corporate Credit, Structured Credit
Estimated AUM: $8.7 T
Estimated Number of Funds: 2,150
Typical Liquidity Structure: Daily liquidity, T+1 settlement
Typical Fee Structure: % of AUM
3. Exchange-Traded Funds (ETFs)
ETFs have grown in popularity over the past few decades. ETFs are similar to mutual funds in many ways and can provide investors with access to both broad and specific mandates. The main difference is that ETFs can trade intra-day, rather than just on closing NAV.
Typical Sector Investments: US Treasuries and Federal Debt, Municipal Credit, Public Corporate Credit, Structured Credit
Estimated AUM: $2.3 T
Estimated Number of Funds: 719
Typical Liquidity Structure: Daily liquidity, T+1 settlement
Typical Fee Structure: % of AUM
4. Interval Funds
Interval Funds are semi-liquid investment funds that enable them to hold fewer liquid assets than mutual funds or ETFs. Interval Funds typically allow investors to access more unique strategies and/or direct lending exposure.
Typical Sector Investments: Public Corporate Credit, Structured Credit, Direct Lending/Private Credit
Estimated AUM: $222 B
Estimated Number of Funds: 65
Typical Liquidity Structure: Quarterlysubscriptions and redemptions
Typical Fee Structure: % of AUM and Performance-Based Incentive Fee
5. Collective Investment Trusts (CITs)
CITs have emerged as one of the fastest‑growing fixed-income vehicles, especially in retirement plans. These vehicles sit mostly inside 401(k) and pension platforms. CITs often mirror mutual fund strategies but with lower fees, no tickers, and bank trust regulation rather than SEC oversight.
Typical Sector Investments: US Treasuries and Federal Debt, Public Corporate Credit, Structured Credit
Estimated AUM: $1.3 T
Estimated Number of Funds: 1,450
Typical Liquidity Structure: Daily liquidity, T+1 settlement
Typical Fee Structure: % of AUM
6. Separately Managed Accounts (SMAs)
SMAs differ from other investment vehicles in that an investor in an SMA has direct ownership of the underlying bonds and loans. Because of this feature, they are particularly popular among high-net-worth and institutional investors due to their ability for customization and tax management.
Typical Sector Investments: US Treasuries and Federal Debt, Municipal Credit, Public Corporate Credit, Structured Credit, Direct Lending/Private Credit
Estimated AUM: $7.4 T
Estimated Number of Funds: N/A
Typical Liquidity Structure: Daily liquidity, T+1/T+2 settlement (depending on the underlying asset)
Typical Fee Structure: % of AUM
7. Business Development Companies (BDCs)
BDCs are specialized fixed-income vehicles that offer direct lending to middle-market companies. While BDCs typically invest high in a company’s capital structure, the nature of the businesses they invest in can expose investors to higher levels of credit risk than may be found in public markets.
Typical Sector Investments: Direct Lending/Private Credit, Syndicated Leveraged Loans
Estimated AUM: $609 B
Estimated Number of Funds: 145
Typical Liquidity Structure:
Publicly Traded BDCs: Daily Liquidity
Non-Traded/Private BDCs: Quarterly Liquidity
Typical Fee Structure: % of AUM and Performance-Based Incentive Fee
8. Hedge Funds and Private Credit
Hedge Funds offer investors exposure to distressed corporate credit, relative-value trades, and arbitrage opportunities, among other strategies. Private Credit provides exposure to direct lending across various industries and risk profiles.
Typical Sector Investments: US Treasuries and Federal Debt, Municipal Credit, Public Corporate Credit, Structured Credit, Direct Lending/Private Credit
Estimated AUM: $4.8 T
Estimated Number of Funds: 3,600
Typical Liquidity Structure: Varies; Quarterly to Drawdown
Typical Fee Structure: % of AUM and Performance-Based Incentive Fee
Choosing the Right Investment Vehicle
The wide range of fixed-income access vehicles available today gives investors more choice, and more complexity, than ever before. By understanding how each vehicle differs in liquidity, cost, structure, transparency, and underlying sector exposure, investors can more effectively align their fixed income allocations with their broader objectives. Ultimately, selecting the appropriate vehicle is not just about accessing bonds or loans, but about ensuring the structure itself supports the desired balance of income, risk, flexibility, and long‑term portfolio resilience.