Rick Rieder, BlackRock's chief investment strategist, believes that investors underestimate the potential of active fixed income ETFs.

Rick Rieder, the Chief Investment Officer of Fixed Income at BlackRock, stated that investors tend to overlook the value of actively managed fixed income exchange-traded funds.

This week, CNBC's "ETF Edge" reported that one of BlackRock's newest fixed income funds, the BlackRock Flexible Income ETF (BINC), has outperformed peers due to its allocations being based on current market opportunity.

"Active ETFs in fixed income are often undervalued, but their flexibility allows us to capitalize on opportunities as they arise," said Rieder, who oversees approximately $2.6 trillion in fixed income assets.

Since its May 23 debut, BINC has gained 0.28%, while the benchmark and the lost 0.16% and 3.89%, respectively, as of Friday's close.

The ETF's largest allocation is in non-U.S. credit, accounting for approximately 22%, followed by U.S. high yield credit at nearly 17% and U.S. investment grade credit at approximately 14% of total allocations. Approximately 30% of the fund's holdings originate outside the U.S.

Overseas opportunities created by a stronger dollar have benefited BINC, according to Rieder.

As a dollar investor, it is a windfall, but for a European or Japanese investor, the cost to hedge their currency is so expensive that they cannot buy U.S. assets.

Although the fund has invested in fixed income opportunities in Brazil and Mexico, Rieder stated that Europe accounts for a "much bigger" portion of the fund's allocation due to attractive currency swap rates.

He stated that they exchange European investment grade credit for dollars, offering 6.5% interest on two-year notes for high-quality companies.

Rieder emphasized the benefits of active management in both identifying opportunities and avoiding areas of weakness.

To generate 50 to 75 basis points annually in your fixed income portfolio, you must outperform the index by building higher yields and removing undesirable holdings. Additionally, you should manage your portfolio's volatility aggressively.