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Passive Investing May Not Work for Fixed Income. But What Does?
By Advisor Perspectives
Wealth Management, Asset Management
In the fixed income market, I think passive investing actually poses a tremendous risk.
There has been a shift from active to passive investing across asset markets. So over the last year we’ve seen over $70 billion move into passive strategies that track the Bloomberg Barclays U.S. Aggregate Index.
I think it’s important for investors to understand what that index is. Often it’s tempting to think about that as “the S&P 500 of bonds,” but I think investors need to understand that bond indices are built a bit differently than equity indices. You get the largest exposure to the most indebted issuers.
Read more at Advisor Perspectives.
Photo: Tsahi Levent-Levi