Make the KORP Call for Improved Corporate Bond Exposure

Corporate bonds, particularly those in the investment-grade corporate camp, are enticing to fixed income investors due to higher yields than cash or Treasuries. Moreover, default rates have been relatively low in the U.S. for an extended period of time, which also indicates that highly rated corporates aren’t subjecting investors to excessive risk. Still, investors looking to enter the corporate bond market can benefit from active management, particularly at a time when spreads are tight – a scenario implying value is difficult to come by.

The American Century Diversified Corporate Bond ETF (KORP) is an example of a corporate bond ETF that’s right for these times. As American Century’s Jason Greenblath explained, tight credit spreads are prompting some investors to outright ignore corporate debt, but that strategy misses the mark, particularly as yields in the asset class remain attractive.

KORP Has the Goods

Passive corporate bond ETFs are widely embraced by advisors and fixed income investors, due in part to low fees. However, those funds may not be responsive enough to economic conditions. They also aren’t able to capitalize on credit, duration, and value opportunities as rapidly as active competitors can. In other words, active management is the first of several reasons that KORP merits consideration in this 2026 landscape.

“We favor a short- to intermediate-duration stance and believe a barbell yield curve strategy makes sense,” noted Greenblath. “This approach combines high‑quality, short‑duration positions for liquidity and intermediate-maturity positions for yield. It’s a strategy that helps preserve flexibility as policy and inflation data evolve.”

There are other reasons advisors and investors may want to consider tapping active management in the corporate bond arena this year. Some market participants may want to avoid exposure to software debt due to recent events in the private credit market. Other investors may seek to capitalize on new, consolidation-fueled supply coming to market – an objective that’s difficult to accomplish with passive ETFs in this category.

“We believe active management is crucial to uncovering promising corporate bonds across market environments and unlocking attractive performance potential for fixed-income investors,” added Greenblath. “Conversely, passive portfolios are beholden to a static market index, limiting opportunities to boost return potential and manage risk exposure, in our view.”

The $756.77 million KORP turned eight years old in January and holds 341 bonds. Rated five stars by Morningstar, the American Century ETF charges 0.29% per year, or $29 on a $10,000 investment.

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