At this point in time, the Agg should need no introduction.
The Bloomberg Aggregate Bond Index, known as “the Agg,” is one of the most-used tools for advisors looking to evaluate the performance of the bond market. By extension, many core fixed income ETFs use the Agg as an index to execute on their strategy.
However, just because a strategy is highly popular doesn’t necessarily mean it’s foolproof. That’s why it’s always important for advisors and investors to look under the hood of any fund or index that they’re interested in using.
While many folks look to the Agg as an even representation of the fixed income market. That’s increasingly becoming less of a case. Over the past few years, the scale of Treasuries within the Agg has continued to grow. As such, the Agg is gradually becoming less of a true fixed income benchmark and more of a play on Treasuries.
Adding KORP to Your Core
Those looking to cultivate a more balanced fixed income portfolio might want to balance the Agg’s Treasury weight with diversified corporate bond exposure. One fund that may very well be able to do the trick is the American Century Diversified Corporate Bond ETF (KORP ).
KORP is an actively managed fund from American Century that aims to offer broad exposure to a variety of corporate bonds. The team behind the fund selects assets based on liquidity, structure, and credit risk.
While KORP offers access to a wide variety of corporate bonds, over half the portfolio falls into the BBB rating. These bonds can offer more valuable yield potential than higher-rated bonds while mitigating some of the volatility risk associated with lower-rated bonds.
As an additional factor to consider, KORP leaves room for up to 35% of the fund’s assets to sit in high yield securities. This opens the fund up to more yield opportunities that a core fund might miss. Meanwhile, the fund’s adaptive active management can help position its portfolio to negate some of the volatility concerns with high yield bonds.
This strategy has already paid for investors in both yield and long-term returns. As of April 30, 2025, KORP has a 12-month distribution rate of 5.07%. Meanwhile, the fund’s NAV has jumped more than 8% over the last 12 months, as of April 30, 2025.
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