FYI: Beating the bond market is far more a matter of luck than skill. That is a surprising and somewhat disturbing statement, since beating the market is widely assumed to be the gold standard for determining whether a manager has ability.
It’s difficult to square that notion with the widely varying percentages of bond mutual fund managers who beat their benchmarks from year to year. In some calendar years this percentage is above 90%, and in other years it is zero.
Either you accept that managers are incredibly able in some years and suddenly inept in subsequent years, or you must conclude that something other than ability is at work.
That something else has a lot to do with whether interest rates have gone up or down over the period in question. Since almost all actively managed bond funds are hedged, even if only slightly, they stand to outperform their benchmarks whenever interest rates rise and bond prices fall. For the same reason, most such funds stand to lag their benchmarks whenever rates fall and bond prices rise.
Regards,
Ted
https://www.marketwatch.com/story/how-to-know-if-your-bond-fund-is-worth-the-money-2019-07-18/print
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