2025 has begun with much the same factors in place as 2024, as tech has continued to dominate markets. With the new year comes a new opportunity for a portfolio refresh. In fixed income, particularly, investors may find value in switching to an active fixed income approach. Yields in corporates, for example, could fluctuate as firms struggle amid a shifting economic environment. An active corporate bond ETF, then, could present a compelling option.
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Right now, with risk premia so high for equities, performance needs to match to justify that risk. Active fixed income may offer healthy yields and tight scrutiny of credit with comparatively less risk. A corporate bond ETF with an active approach, for example, could benefit portfolios and investors quite a bit while avoiding equity risk issues.
Active Fixed Income to Get More Out of Corporates
The Fidelity Corporate Bond ETF (FCOR ) is a powerful option. Launched more than a decade ago, it actively invests in investment-grade corporate bonds. With a relatively low expense ratio of 36 basis points, FCOR could replace a passive corporate bond fund or serve as a strong satellite addition.
The ETF’s active fixed income approach could help identify the most appealing, lower-risk firms and investment-grade corporates. The ETF has returned 2.5% over its lifetime, per Fidelity Investments, outperforming its market benchmark, the Bloomberg U.S. Credit Index. FCOR also offers a 5.3% 30-day SEC yield, according to Fidelity Investments data as of January 27.
While obviously not a 1:1 comparison with equities, that solid yield with less risk can undoubtedly appeal. An active fixed income approach can get the most out of fixed income, adapting to events and rolling bonds more effectively than passive index funds. For those looking to refresh overall portfolios, the corporate bond ETF offers a good place to start.
For more news, information, and analysis, visit the ETF Investing Channel.
Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.
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