Passive Fixed Income Portfolio Management

Data supports idea active managers consistently outperform after fees generally with lower volatility.

Passive fixed income portfolio management. The risks embedded in passive fixed income indexing. What are the benefits of active portfolio management. The active versus passive management debate has always been an intriguing one in fixed income. The passive buy and hold investor is typically looking to maximize the income generating properties of bonds.

Below is a basic summary of the merits of passive fixed income investing. An active fixed income investment strategy involves positioning the portfolio to capitalize on market conditions. Our indexed fixed income portfolios were designed by active managers based on true investment experience in fixed income. Passively managed funds tend to charge lower fees to.

We are showcasing that active insights in a passive wrapper work even in. Another idea that seems to appeal to passive fixed income investors is the perception of liquidity especially for exchange traded funds etfs and exchange traded managed funds etmfs. Overweight underweight sectors. With active portfolio management investors have the opportunity to outperform a passive portfolio.

We largely agree with this idea but investors do have to understand that market makers could step away in an extreme scenario and the liquidity of the etf will be impacted by the liquidity of the underlying assets. Retail investors are told that fixed income is the safe portion. As there are active steps being taken to beat the market. Should you use both in fixed income.

Passive exposure to bond and loan markets may pressure your portfolio when the business cycle turns. Overweight underweight asset classes. Follow arbitrarily constructed indices and can be poorly diversified. Goal is to produce results that are similar to that of the index.

For example an actively managed fixed income portfolio the portfolio manager can. The premise of this strategy is that bonds are assumed to be safe predictable sources. Overweight underweight issuers. On the one hand the allure of cheap market exposure to a low volatility asset class is tempting.

The most basic retirement portfolio model includes two asset classes equity and fixed income often in a 60 40 split. Goal is to produce results that are better than that of the index.