The basic premise of most corporate bond indexes is flawed. There has to be a better way.

Fixed income has been the fastest-growing corner of the ETF market this year, pulling in $31.5 billion in new capital through September. Those inflows worry me, for a number of reasons.

First, as I’ve written about previously, those inflows have forced some corporate bond ETFs to trade at large premiums to their net asset values. Those premiums are sustainable so long as investors continue to buy. Unfortunately, like all ETF premiums, if fund flows reverse, those premiums can collapse and turn into discounts, and investors will be left holding the bag. (See related story here.)

But there’s an even more fundamental problem with corporate bond ETFs, which stems from the way their indexes are constructed. This is the elephant in the room in corporate bond indexing, and it amazes me that it