Pursuit of Alpha Lessens Diversification Benefits

There are ardent believers in the case for active management in core bonds given a more compelling track record of active managers outperforming the index. The issue is that outperformance has traditionally come through an overweight to the credit sector which erodes diversification benefits relative to equities, undercutting the role of asset class in the glidepath.

  •  US Agg Bond Index

Correlation of Active Core Bond Managers in the eVestment Universe to S&P 500 Index, Rolling 3-Years