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Gene Tannuzzo explains why a strategic beta approach makes a lot of sense in fixed income, particularly relative to traditional passive strategies.
Passive investing poses a tremendous risk in the fixed-income market, says Deputy Global Head of Fixed Income Gene Tannuzzo. A traditional bond index is weighted toward the most indebted issuers and may not provide the risk diversification investors need. Tannuzzo describes a strategic beta approach as an alternative — one that uses rules-based filters to target a better balance of yield, quality and liquidity.