Fixed Income: Preparing for the Big Shift
The Rise of Indexing in Fixed Income
Earlier this year, State Street Global Advisors conducted a survey of over 350 institutional investors. Our respondents came from pension funds, wealth managers, asset managers, and sovereign wealth funds. Their responses confirmed that there is a substantial shift underway in fixed income investing. This paper is the first in a series that focuses on what the key findings are likely to mean for fixed income investors.
Our survey found that while active fixed income portfolio management still predominates, the gap between active and index outcomes is narrowing in just about all segments.
Globally, over the next three years more than one-third of institutional investors plan to increase their allocation to fixed income index strategies. And for certain segments in Europe, those figures are even higher: 43% for High Yield, 41% for Emerging Market Debt and 32% and 31% for Global Aggregate and Investment Grade Corporate, respectively. In fact, in Europe, a mere 7% had no plans to increase their allocations to index strategies for their fixed income portfolios.
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