CALIFORNIA CONSUMER

Aside from the tendency to underperform, we believe there are several other problems with passive fixed income indexes... We wanted to highlight some of the general issues with passive fixed income indexing, which can be very different than the passive equity indexes that many people are more familiar with. We will focus our discussion on the U.S. Aggregate Bond Index because it is perhaps the most ubiquitous passive bond index in the world. However, the potential pitfalls discussed herein are not unique to the U.S. Aggregate Bond Index and pertain to most, if not all, passive bond indices with similar construction methodologies... We believe the fixed income market, in which active management has a history of outperformance and the exposure of passive funds can change under the surface, is an ideal environment for a tactical approach. Tactical strategies will attempt to navigate these potential shifts by allocating toward strength in the market.

Primary location: Federal Way United States