Gauging opportunities from benchmark-agnostic investing

FIXED INCOME

Andrew Johnson, managing director and co-portfolio manager of the Neuberger Berman Global Bond Absolute Return fund, explains the benefits of benchmark-agnostic opportunistic investing.

As Mark Twain once said: “Reports of my death have been greatly exaggerated.” The same could be said of the Barclays US Aggregate Bond index, a market-weighted amalgam of fixed income assets, which reflect the strengths, weaknesses – and distortions – of the overall US bond market. In my 20-plus years as a portfolio manager, I have seen the death of the index – affectionately known as the ‘Agg’ – forecast no fewer than three times. US federal budget deficits are fuelling expectations the Agg will become dominated by treasuries – making it an index devoid of significant yield, and the v...