BlueBay's Dowding: Active investors can 'exploit' inefficiencies in bond indices

Opportunities in fixed income 'beyond benchmark tracking'

Active management techniques can exploit "structural flaws" that exist in the composition of fixed income benchmarks and the volume of assets passively tracking such benchmarks to maximise returns for investors, according to BlueBay Asset Management's Mark Dowding.

The chief investment officer, in a post on the company's website dated 5 October, sets out why, with fixed income offering yields at unprecedented lows, "return generation needs to be maximised through proactive approaches that look to utilise the opportunities the asset class offers beyond simple benchmark tracking". Dowding, in comparing equity indices and bond benchmarks, writes that the greater number of fixed income securities makes benchmark replication more challenging in comparison to equities. Enter the golden age of credit (yes, really) He also wrote that "as bonds don't ...