In the initial quarter of 2025, the NYLI MacKay Muni Insured ETF faced challenges, demonstrating a performance that lagged its comparative benchmark, the Bloomberg All Insured Index. This period was marked by a divergence in the municipal bond market, where certain segments like investment-grade tax-exempt bonds recorded negative total returns. Conversely, high-yield tax-exempt and taxable municipal indices, alongside other fixed-income instruments, delivered favorable outcomes. A key factor influencing the fund's relative performance was its portfolio structure, specifically an overweight position in bonds with longer maturities (15 to 27 years) and a corresponding underweight in shorter-term bonds (3 to 12 years).

During the first quarter of 2025, the municipal bond market presented a complex landscape. Data indicates that investment-grade tax-exempt bond indices encountered negative returns, a stark contrast to the positive performances observed in both high-yield tax-exempt and taxable municipal bond categories. This diverse market behavior underscores the importance of strategic asset allocation and the impact of interest rate sensitivities across different bond segments. Investors in municipal bonds navigated an environment where short-term interest rate fluctuations and shifts in credit perceptions played significant roles.

The NYLI MacKay Muni Insured ETF's specific duration positioning, characterized by a higher allocation to bonds maturing in the 15-to-27-year range, proved to be a critical determinant of its quarterly results. This strategic tilt meant the fund was more susceptible to movements in the longer end of the yield curve. The market's varied reactions to economic data and monetary policy expectations impacted different maturity segments unevenly. While longer-duration bonds can offer higher yields in a stable or declining interest rate environment, they also carry greater interest rate risk, which materialized during this period for the fund. This highlights the delicate balance between yield enhancement and risk management in bond portfolio construction.

The market's performance metrics for the quarter emphasized the nuances within the broader fixed income spectrum. While some segments contracted, others expanded, reflecting varying risk appetites and economic forecasts among investors. The divergence between different municipal bond types underscores that not all municipal investments behave uniformly, even within the same asset class. Factors such as credit quality, tax status, and duration collectively shaped the investment outcomes, prompting fund managers to constantly evaluate and adjust their holdings to align with prevailing market conditions and their investment objectives.

The first quarter of 2025 offered a compelling illustration of the dynamic nature of the municipal bond market, where distinct segments responded differently to economic forces. The NYLI MacKay Muni Insured ETF's performance, while lagging its benchmark, provides valuable insights into the consequences of specific portfolio exposures in a fluctuating market. This period highlighted the critical interplay between bond maturities, credit quality, and broader economic indicators in shaping investment returns within the municipal bond universe.