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Passive Investing May Not Work for Fixed Income. But What Does?

By Advisor Perspectives
Wealth Management, Asset Management

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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

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