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The Bond Pickers Strike Back – Bloomberg Gadfly


It’s generally been a terrible few years for humans who pick bonds for a living.

Clients both big and small have sent them a sobering message that they’re usually not worth the money they’re paid. Investors have yanked billions of dollars from active, higher-fee strategies, or those guided by human decision-making, while pouring cash into cheaper funds designed to mirror indexes.

Ditching Human Decisions

Investors have broadly favored passive funds over active ones in the past year.

A Bloomberg article on Tuesday highlighted just how far this trend has gone. Pensions are increasingly abandoning hedge funds and other more expensive strategies, sometimes in favor of index funds.

But suddenly, as global bond markets reel in the wake of Donald Trump’s election as U.S. president, managers of active bond funds are soundly beating broad benchmarks.  Read More…