Why Invest in Core Plus Now
Bond yields have moved significantly higher over the past year which has resulted in investors flocking to the fixed income market. To date, investors have moved over $40 billion into the core plus category 1 alone, with a significant amount going into passive strategies.
Troy Johnson, CFA, Director of Fixed Income Research, and Greg Shea, CFA, Senior Portfolio Manager, discuss the challenges of passive investments and the benefits of investing in an actively managed core plus strategy now.
Key Takeaways
- Passive strategies are garnering much of the flows; however, we believe these strategies possess significant structural problems which could lead investors to miss out on return opportunities.
- The universe of core plus managers is broad, with many managers investing in areas of the market which can add risk and volatility.
- We see opportunities for core plus in actively managed strategies that invest in the high yield market, where duration has decreased over the last 15 years and the percentage of higher quality credits has increased.
- At SBH, we focus on BB quality credits in our Core Plus strategy with the goal of enhancing yield and reducing volatility in client portfolios.
Fact Sheet:
Additional Resources:
1 Source: YCharts, Inc. as of 5/31/23.
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