‘Barbell’ effect helps fixed income newcomers usurp traditional bond funds

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Financial Times 3d ago

‘Barbell’ effect helps fixed income newcomers usurp traditional bond funds - Financial Times

Quick Summary:

And, as such, they reflect what has unfolded in equity markets this century, with investors favouring cheap index-tracking funds at one end of a “barbell” investment strategy — with alternative assets such as private equity and hedge funds at the other.

In recent years in Europe, for example, about half of actively managed bond funds have outperformed their passive equivalents over one and three years, and about a third have over five years, net of fees, according to Morningstar data.

Six large alternative managers — Brookfield, Carlyle, Ares, Blackstone, KKR and Apollo — generated net new money growth of between 15 per cent and 40 per cent in their credit strategies in the year to June 2024, he notes, even as global long-only bond funds as a whole eked out growth of 1 per cent.