The growth of passive investing is widely discussed by equity market investors, but less so in fixed income. This is because there are a number of differences between equity and bond indices that need to be taken into consideration when analysing the active versus passive debate, which we believe supports the case for active management.
The likely challenge over the next few years is likely to be to preserve, rather than seek higher returns on capital. This is particularly important given that global central banks are currently withdrawing monetary easing. We believe that active management will be crucial in this kind of market environment, particularly in the short-dated corporate credit space.