Virtus Newfleet ABS/MBS ETF

Virtus Newfleet ABS/MBS ETF (VABS), renamed Virtus Newfleet Securitized Income ETF in its November 2025 prospectus, is an actively managed bond fund. It holds investment-grade bonds backed by pools of loans and payments, from auto loans and mortgages to restaurant franchise income. It paid a 5.22% trailing yield monthly as of October 27, 2026, and its price has moved little. Its 0.39% expense ratio is the highest among the similar funds compared, which average 0.14%.

• Over the year to Oct 27, 2026, VABS returned +2.7%, 3rd of 8 among similar funds.
• Its 5-year annualized return was +3.3%.
• Its worst full calendar year was 2022 (-5.2%); its best was 2023 (+7.6%).
• The deepest fall in its price history was 7.1% (Sep 8, 2021 to Nov 4, 2022), recovered by Dec 1, 2023.

As of Jul 31, 2026, the fund held 161 securities; the ten largest made up 17.75% of assets.

The bonds mature in 20.2 years on average (weighted by size), with an average coupon of 5.42%.

• Over the three months to Jul 31, 2026, investors added a net $33.8M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.37%, +0.26%, +0.16%.

VABS does not track an index. Newfleet Asset Management, a division of Virtus Fixed Income Advisers, picks the bonds with the goal of earning income. At least 80% of net assets goes into investment-grade tranches of asset-backed securities (ABS) and mortgage-backed securities (MBS). These are bonds paid from pools of loans or receivables. A tranche is one slice of such a deal, with its own place in line for payments. The fund buys only debt tranches. Collateral can include auto loans, credit cards, student loans, equipment leases, timeshares and whole-business deals, where a company's franchise income backs the bond. The prospectus requires more than 25% in agency and non-agency MBS. It sets no limit on maturity.

As of July 31, 2026, the fund held 161 positions, and the top 10 made up 17.75% of assets. The largest were a Freddie Mac mortgage pool (2.9%), MMP Capital 2025-A (1.9%), OBX 2024-HYB1 Trust (1.9%), Taco Bell Funding (1.8%) and Prestige Auto Receivables Trust 2025-1 (1.8%). Average maturity was 20.2 years and the average coupon was 5.42%. Annual turnover was 70%.

Most holdings are Rule 144A securities, which are sold to large institutions and can be harder to resell. The fund may use derivatives such as credit default swaps, but it held none as of July 31, 2026.

• VABS charges 0.39% a year, versus an average of 0.14% for the similar funds below (8th of 8, cheapest first).
• Of that, 0.49% is the management fee; the rest covers other fund expenses.
• The fee includes a 0.1% waiver from the adviser, which may end.
• Using the prospectus's standard example, $10,000 invested would cost about $40 in the first year and $606 over 10 years (assuming a 5% annual return).

VABS pays monthly income from loan-backed bonds, and its price swings have been small and largely unrelated to stocks.

VABS could add monthly income that has barely moved with the stock market. As of October 27, 2026, its one-year beta was 0.01, its three-year volatility was 2.2% and its trailing yield was 5.22% ($1.24 per share). It launched in February 2021, so it has no record for 2008 or 2020. In the 2022 bear market it fell about 5.6% from peak to low. Its deepest drop was 7.1%, from September 2021 to November 2022, and it took about 13 months to recover, in December 2023. 2022 was its worst calendar year (-5.19%, per the prospectus). Someone selling shares then would have locked in a loss, though a modest one.

Things to watch: the 0.39% expense ratio, the fund's small size ($112 million as of July 31, 2026) and Rule 144A holdings that may be hard to sell in a crisis. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).