Fixed income investors have been placing their faith in passive funds for some time, with tracker funds pulling in significant money while their active equivalents are in the red.
UK asset class flows 2022 (£bn) Source: Refinitiv Lipper This is well illustrated by UK net fund flows over 2022. The most obvious thing from even a cursory glance at the above graph is that, while it was a bad year for risk assets, passive bond funds have fared rather better. While their active equivalents suffered redemptions of more than £20bn, passive mutual bond funds took £11.6bn, and bond ETFs netted £6.2bn. Cheap and liquid There are a few likely reasons for this. One, of course, is cost: passives are much cheaper. Within the Lipper Fund Classifications on table 1 (of which...
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