The first of three ETFFixedIncome.com model updates examines how the 10Spot Model combined credit, liquidity, duration and equity income to outperform the Aggregate Bond Index during August.
August highlighted the central purpose of the ETFFI 10Spot Model: generating fixed-income-like portfolio income without relying on a single interest-rate or credit-market outcome. The model returned 0.82% during the month, outperforming the iShares Core U.S. Aggregate Bond ETF (AGG), which gained 0.39%. That 0.43 percentage-point advantage extended a pattern visible across every reported measurement period.
The environment was challenging for conventional bond allocations. The two-year Treasury yield increased approximately 7 basis points to 4.34%, while the 10-year yield rose about 3 basis points to 4.75%. Inflation expectations edged higher, and core personal consumption expenditures inflation remained at 3.3% year over year. At the same time, weaker payrolls, retail sales and housing data increased uncertainty about the economic outlook.
Rather than making a concentrated bet on falling rates, 10Spot distributed risk across ten distinct portfolio sleeves. Its August 31 positioning included investment-grade corporate bonds through LQD, Treasury liquidity through SGOV and SHY, high-yield credit through HYG, inflation protection through TIP, long-duration Treasuries through TLT and floating-rate loans through BKLN. EMB and MUB added emerging-market and municipal exposure, while SCHD provided a measured allocation to dividend-paying U.S. equities.
That structure allowed several sources of return to work simultaneously. HYG gained 0.90% in August as high-yield credit spreads narrowed by 22 basis points. BKLN returned 1.44%, benefiting from its floating-rate income and limited duration sensitivity. TLT gained 0.73%, while EMB returned 0.55%. LQD matched AGG’s 0.39% return, and the short-term SGOV and SHY sleeves remained positive. These gains more than offset modest weakness in TIP and MUB.
The model’s longer-period results reinforce the August outcome. Year to date, 10Spot returned 3.28%, compared with a 0.18% decline for AGG—a 3.46 percentage-point advantage. The model gained 5.19% over one year versus 1.90% for the benchmark. Its annualized three-year return was 5.91%, exceeding AGG’s 4.07%, while its annualized five-year return was 1.85% versus a 0.28% decline for the benchmark.
Importantly, the recent return advantage did not require greater measured volatility. Through July 31, the model’s one-year return was 5.74% with a 3.01% standard deviation, compared with a 1.89% return and 3.21% standard deviation for AGG. Its one-year beta to the benchmark was 0.79, and its down-market capture was approximately 60%. These statistics suggest that recent outperformance came from more efficient risk allocation rather than simply adding market sensitivity.
The portfolio offered a 4.46% distribution yield as of August 31. Its fixed-income holdings had a 5.14% yield to worst and 4.8-year effective duration, compared with a 4.95% yield to worst and 5.73-year duration for AGG. The yield advantage was modest, but it was achieved with lower interest-rate sensitivity and substantially broader exposure.
For Registered Investment Advisors, 10Spot can serve as a diversified strategic income allocation between traditional core bonds and more specialized credit strategies. Its liquidity reserve and Treasury holdings provide defensive capacity, while corporate credit, bank loans, emerging-market debt and dividend equities expand the opportunity set.
The model is not a direct substitute for a high-quality core bond portfolio. Credit, equity, emerging-market and municipal exposures introduce risks that may behave differently during a severe downturn. Nevertheless, August demonstrated the benefit of combining multiple income and return drivers when the direction of rates, inflation and economic growth remains uncertain.
Sources: ETF Action/FactSet ETFFI 10Spot Model Fact Sheet, August 31, 2026; ETFFixedIncome.com Fund Universe Returns and Flows; ETFFixedIncome.com Fixed Income Macro Data; ETFFixedIncome.com Economic Calendar.
Disclaimer: This material is for informational and educational purposes only and does not constitute investment advice. Model results are hypothetical and may differ materially from actual client results. Distribution yield is not guaranteed. Past performance does not guarantee future results.
