Skip to content
Subscriber Only
Markets
Deals

The Simple Reason Why Everyone Wants New Corporate Bonds

(But not everyone can have them)
Corporate bonds can pull ahead in the alpha-generating race

Corporate bonds can pull ahead in the alpha-generating race

Photographer: Luke Sharrett/Bloomberg

Wall Street investment managers are inevitably judged against a benchmark such as a broad index of stocks or bonds or a mix of the two. Producing returns higher than the benchmark is the holy grail for investment managers who, after all, are paid for their investing expertise and ability to outperform. This outperformance is called alpha and everyone wants it.

But alpha has been scarce in recent years. More than half a decade of ultra-low interest rates and extraordinary monetary stimulus from the world's central banks means that many assets are moving in tandem, making it more difficult for investment managers to find alpha-generating opportunities. If assets were racing they’d many would be neck and neck, so to speak.