Why Fixed Income Has Become an Active Manager’s Market

Morgan Stanley's Broad Markets Fixed Income Multi-Sector Playbook argues that increasing dispersion across economies, sectors and issuers is making active management more valuable than broad benchmark exposure.

• Diverging growth, inflation and monetary policy are creating wider differences across countries and credit markets, making security selection increasingly important.

• With credit spreads near historic lows, the report argues future returns will rely more on carry, sector allocation and avoiding deteriorating credits than on further spread compression.

• Morgan Stanley favours higher-quality fixed income—particularly securitized credit—while warning that passive bond benchmarks are becoming increasingly concentrated in the most indebted issuers.

Read the full report for a detailed outlook on fixed income, sector positioning and the opportunities created by a more fragmented market.