Which are the Benchmark-beating Bond Funds?

When volatility and costs are high, both active and passive funds struggle to keep up with the index

Mara Dobrescu 19 June, 2018 | 9:16AM

benchmark investing bond funds fixed income calculator index

Fees are particularly important to consider for fixed-income funds. With yields near historic lows across bond markets, fees have eaten up an even larger share of funds’ returns, leaving less for fund investors to pocket. It’s no surprise that in this context, investors have increasingly turned to the expanding menu of low cost passive index and exchange-traded funds for their bond exposure.

A recent study published by Morningstar finds that, in many bond categories, it is preferable to choose a low-cost passive option, but there are also areas in which investors have reasonably good odds of selecting an active bond fund that’s capable of beating its benchmark after fees.

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About Author

Mara Dobrescu

Mara Dobrescu  is a fund analyst at Morningstar France.

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