The Case for Indexing in the Corporate Bond Market
Low fees and market-representative portfolios make corporate bond ETFs a compelling option.
Exchange-traded funds tracking indexes that are representative of the broad investment-grade corporate bond market are a solid option for exposure to this asset class. Portfolios that mimic the contours of this opportunity set and boast low fees have been difficult for active managers to beat. Over the 10 years through June 2020, just 40% of actively managed funds in the corporate bond Morningstar Category managed to survive and outperform the average of their passive peers.
This article explores the contours of the investment-grade corporate bond market, how it has evolved over time, and the case for indexing in this asset class.
Neal Kosciulek does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.