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Why Machines May Replace Active Bond Managers

TedTed
in Fund Discussions
FYI: A machine could soon replace your bond fund manager.

According to new quantitative research from Invesco, the majority of excess returns generated by a large sample of U.S. bond funds can be explained by their exposure to factors, not the specific skill of the portfolio manager. Funds designed to systematically capture factors, characteristics of securities that can explain long-term excess returns, have become increasingly popular in equity markets. But factor-based funds are still relatively new to the bond fund world, in part because there isn’t as much academic research to support fixed-income factors.
Regards,
Ted
https://www.institutionalinvestor.com/article/b1fd7nzm8gh1x2/Why-Machines-May-Replace-Active-Bond-Managers

Comments

  • Gary
    Why is this not comparing apples to oranges?

    "Over the 12 months through June, only 36 percent of active U.S. equity funds outperformed their benchmarks, according to Morningstar. But more than 70 percent of intermediate-term bond funds outperformed their passive indexes over the same time period, the investment research firm found."

    I'll bet Ted's chimps can do this good - and cheaper!!
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