Active Bond Funds Juicing Returns With Junk Not Talent, AQR Says
- Fixed income returns are highly correlated with junk bonds
- Investors can’t rely on funds for diversification, quants say
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The skill of active fixed income managers may have been grossly overstated, according to new research from AQR Capital Management.
While parabolic stock indexes create a hard foe for equity managers to beat, their peers in the fixed income world consistently surpass benchmarks. It’s allowed them to evade the kind of cull seen across the rest of the active industry, but the outperformance isn’t due to talent, AQR said.