July 21, 2021
Our latest research uncovers four major trends transforming fixed income portfolios, revealing what is driving institutional investors across the globe to adopt new ways of fixed income investing.
Chief Portfolio Strategist Gaurav Mallik shares four key fixed income trends from our recent survey of institutional investors that together represent a big shift in how future fixed income portfolios will be constructed.
say that increased use of indexing is a high priority for both core and non-core FI exposures over the next three years.
report that maximizing the impact of asset allocations is their key driver for index adoption.
will make the move because they believe the opportunity to add alpha is in decline.
ETF performance during 2020 pandemic-related market stress highlights new investment possibilities for institutions.
say that ETFs will play a bigger role in portfolio construction.
cite ETFs' liquidity and price discovery benefits during the pandemic as key to their increased attraction.
say they have a strong appetite to increase use of ETFs in their core fixed income portfolios.
say ESG integration into their fixed income portfolios is a high priority over the next three years.
of European investors cite Best-in-Class as their preferred approach.
of North American respondents cite Impact as their preferred approach.
of the largest, most sophisticated investors say that having a dedicated China fixed income exposure is a high priority.
overall intend to increase their China allocation within the next three years.
will increase their allocation to EMD over the next three years.
State Street Global Advisors conducted a survey of 358 institutional investors in May 2021. The global survey respondents came from pension funds, wealth managers, asset managers, and sovereign wealth funds. Their responses confirmed that the evolution in fixed income investing is very real and, in fact, that institutional fixed income investing could be at a tipping point where "evolution" will become "revolution."
Indexing’s ability to capture the performance potential of even the most complex fixed income exposures, in a cost-effective way, means that active management is no longer the default choice for fixed income investors.
Index strategies are increasingly seen as a complement to active strategies, offering investors a broader, less concentrated portfolio and higher liquidity – as well as greater flexibility and choice in asset allocation.
In the world of investment management, the active versus indexed debate is a longstanding one. The discussion has evolved over time, and one of the most enduring questions we field is whether active management or indexing makes more sense for certain fixed income sectors, and for the asset class as a whole.
Learn more about Fixed Income at State Street Global Advisors.