Bond Index Funds Rising
Fixed-income investors adopted indexing more slowly than did equity shareholders. Part of the reason was that indexers began with stock funds, turning to bonds only later. Another was that active equity managers were the first to become discredited. By 2010, they were distinctly unpopular, while fixed-income managers Bill Gross and Jeff Gundlach remained investment royalty.
The latter has changed. Gross was pushed out of the company he founded. Meanwhile, Gundlach’s flagship fund, DoubleLine Total Return Bond DBLTX, has reverted to the mean. Over the past 10 years, the fund’s returns slightly trail its category’s average. (In fairness, the fund also has been somewhat less volatile.) With its star managers struggling, active bond management has lost favor. Index funds now account for 43% of the group’s assets. By 2027, they will outweigh their actively run counterparts, as has already occurred with…
