ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Artificial Intelligence
      • Beyond Basic Beta
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Direct Indexing
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Investing
      • ETF Education
      • ETF Strategist
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Institutional Income Strategies
      • Leveraged & Inverse
      • Managed Futures
      • Market Insights
      • Modern Alpha
      • Multifactor
      • Responsible Investing
      • Retirement Income
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Commodities
        • Gold/Silver/Critical Minerals
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Core Strategies Channel
  2. Diversify Exposure to Corporate Bonds With One ETF
Core Strategies Channel
Share

Diversify Exposure to Corporate Bonds With One ETF

Ben HernandezJun 21, 2023
2023-06-21

The S&P 500 is up over 15% year-to-date, but bonds may be looking more attractive from a value standpoint. This includes riskier corporate bonds that can offer fixed income investors more yield in a current rising rate environment.

“No matter how you slice it, stocks just aren’t that attractive relative to bonds these days,” a Barron’s article said, noting that the current rally in the S&P “has pushed the index’s valuation multiple higher, while bond yields have held their ground.”

For fixed income investors looking to shift from safer government bonds in order to extract more yield, corporate bonds are worth a look in return for accepting more credit risk.

“When it comes to earning the highest yields, corporate bonds often come out ahead of Treasury bonds issued by the federal government and municipal bonds issued by state and local governments,” a Motley Fool article explained.

With a vast universe of corporate bonds to choose from, an easier way to obtain exposure is via exchange-traded funds (ETFs). Another question remains — exactly which ETF?

An Active, Diversified Bonds ETF Option

ETFs can come in passive and active varieties. The latter is typically deemed as more expensive, but at 29 basis points, one fund worth considering is the American Century Diversified Corporate Bond ETF (KORP C+).

The active strategy puts the debt holdings in the hands of investment professionals rather than individual investors or advisors hand-picking the bond holdings themselves. In the case of KORP, those holdings amount to over 200, giving the fund a healthy dose of diversification.

Furthermore, the fund skews more towards debt with shorter maturities (about 80% of its holdings are comprised of bonds under a 6-year duration). As Federal Reserve rate hikes dissipate, this can allow investors to lock into the higher yields of today.

KORP offers yield while also maintaining investment-grade quality. Per its fund description, it seeks current income by emphasizing investment-grade debt while dynamically allocating a portion of the portfolio to high yield.

Per its product website, KORP creates a systematically managed portfolio that integrates fundamental and quantitative expertise that:

  • Adjusts investment-grade and high yield components to balance interest rate and credit risk.
  • Screens individual credits to seek those with sound fundamentals, reduced default risk, attractive valuations, and liquidity.
  • Adjusts industry and duration exposures as risks and opportunities emerge.
  • Offers cost effectiveness with a relatively low 0.29% expense ratio.

For more news, information, and analysis, visit the Core Strategies Channel.


Content continues below advertisement

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X