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    Top Active Fixed Income Fund Manager on Strategy and Interest Rate Outlook

    According to Morningstar, equity pickers don’t tend to outpace the index, but active bond fund managers are a little better.

    According to Morningstar’s semi-annual report, about 84% of active fixed income fund managers outperformed in the year ended June 30, 2021, while only 47% of active equity fund managers outperformed. was.

    While the gap narrows over time (only 27% of active bond funds have surpassed benchmarks in the last decade, 25% of active equity funds), active management offers bond investors some benefits. Yes, Pimco’s Jerome Schneider told CNBC. “ETF Edge” this week.

    Schneider is Pimco’s short-term portfolio manager, the second largest actively managed fixed income ETF in the world. PIMCO Enhanced Short Maturity Active Exchange Traded Fund (mint).

    According to Schneider, the flexibility to deviate from the benchmark index is an “incredibly significant differentiator” for active fixed income fund managers.

    For example, in 2020 and 2021, many active fixed income fund managers succeeded in taking on additional credit risk. Federal Reserve He said it had eased the burden on the bond market.

    But the Fed is now showing that it’s about to begin Tapel the bond purchase He warned that withdrawing financial support could lead to additional risks if managers were not careful.

    He noted that in 2008, during the financial crisis, only about 8% of the Bloomberg Barclays Composite Bond Index was invested in the lowest-ranked BBB-rated bonds in the investment grade category. Currently, they make up more than 15% of the index, Schneider said.

    “Simply owning an index means you own more credit risk, but this may not necessarily be the right position in this current environment … slowing growth. But the policies of various central banks are creating a bit of a trend, and in the future it will be a little more volatile. “

    According to Schneider, agile active managers can help mitigate and mitigate the risk of the Fed’s interest rate timeline, which is still cloudy.

    “The era of low interest rates and low volatility is gone,” but short-term fluctuations could make the Fed more patient than expected as it waits for supply chain disruptions and other inflationary pressures in the market. He said there was. Said.

    “The forecast for a rate hike is probably still in 2023 and is probably very much pushed in late 2022,” Schneider said. “For now, inflation is starting to ease and I think the Fed will be a little more generous in how it responds to the current situation.”

    Top Active Fixed Income Fund Manager on Strategy and Interest Rate Outlook

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    The post Top Active Fixed Income Fund Manager on Strategy and Interest Rate Outlook appeared first on Eminetra.

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