Calculating The Active Advantage In Fixed Income
Summarize this article with:
PIMCO2.62K FollowersFollow5ShareSavePlay(12min)CommentsSummaryReevaluating passive bond allocations – which have historically underperformed active strategies – may open the door to improved investment outcomes.Active management costs more – typically about 35 bps more across the five largest Morningstar fixed income categories by assets under management, as of 30 September 2025.New bond issues are often priced at a discount to attract buyers, and active managers can look for these opportunities. DNY59/iStock via Getty Images Don’t leave money on the table. It’s a central tenet of investing to seek the most from every opportunity and not settle for less than you could potentially earn. Investors in passive fixed income allocationsThis article was written byPIMCO2.62K FollowersFollowPIMCO is a global leader in active fixed income. With our launch in 1971 in Newport Beach, California, PIMCO introduced investors to a total return approach to fixed income investing. In the 50 years since, we have worked relentlessly to help millions of investors pursue their objectives – regardless of shifting market conditions. As active investors, our goal is not just to find opportunities, but to create them. To this end, we remain firmly committed to the pursuit of our mission: delivering superior investment returns, solutions and service to our clients. Visit PIMCO’s blog.
Subscribe To Get PIMCO Insights Delivered Directly to Your Inbox.Quick InsightsHow does active fixed income performance compare to passive over the last two decades?Active bond funds outperformed their median passive peers in 64% of rolling 10-year periods, delivering 29 bps annualized excess return, net of fees.What market characteristics favor active management in fixed income?Bond market inefficiencies—such as non-economic participants, index rebalancing, and issuer weighting—enable active managers to exploit pricing and structural alpha opportunities.Why is now a compelling time to consider active fixed income strategies?With starting yields near multi-year highs and increased geopolitical volatility, active managers can capitalize on sector, geography, and maturity shifts unavailable to passive funds.Recommended For You