October 27, 2022

Fixed income indices: From benchmark to investment solution

Increasingly fixed income indices are being seen as an investment solution, given the steady growth of passive funds and ETFs in the fixed income space. The combination of the downward pressure on fees and a lack of performance differential for active funds means that passive AUM is starting to overtake active AUM.

Investors are aware that passive solutions can achieve similar returns and non-financial objectives, such as ESG, as actively managed funds, especially after fees are taken into consideration. Increasingly, the demand is for more innovative fixed income benchmarking, providing investors with indices that achieve complicated goals, while maintaining replicability for passive strategies.

We explore the key trends driving the growth of fixed income passive funds and ETFs.