Why active managers in bonds and real estate are finding success
- Active bond and real estate funds outperformed passive funds in 2023
- Structural factors contribute to the success of active managers in bonds and real estate
- Real estate sector is less efficient and offers more opportunities for active managers
- Successful global real estate funds made outsized bets on U.S. real estate
- Bond market is inefficient, allowing active managers to capture gains on mis-priced securities
- Active managers had an edge in corporate bonds as credit spreads tightened
- Long-term success rate for active funds remains low
- Passive investing trend continues to grow
- Active bond and real estate funds expected to have another strong year
Actively managed real estate funds and bond funds had a successful year in 2023, outperforming their passive counterparts. While active U.S. stock funds struggled, active bond and real estate funds fared better than average. The real estate sector, packed with real estate investment trusts (REITs), offers more opportunities for active managers due to its inefficiency. Successful global real estate funds made significant bets on U.S. real estate, which had a strong comeback in 2023. The bond market, with its over-the-counter trading, allows bond traders to capture gains on mis-priced securities. Active managers in bonds also benefited from their positioning and exposure to corporate bonds as credit spreads tightened. However, the long-term success rate for active funds remains low, with less than 25% of active funds beating their passive counterparts over the past decade. The trend towards passive investing continues to grow as money managers struggle to consistently beat the indexes. Despite this, active bond and real estate funds are expected to have another strong year in 2024.
Factuality Level: 8
Factuality Justification: The article provides detailed information about the performance of actively managed real estate and bond funds compared to passive funds in 2023. It includes data from Morningstar and quotes from industry experts to support the analysis. The article does not contain irrelevant information, misleading content, sensationalism, or bias. It presents a balanced view of the topic and offers insights into why active managers in bonds and real estate were more successful in 2023.
Noise Level: 3
Noise Justification: The article provides a detailed analysis of the performance of actively managed real estate and bond funds compared to passive funds in 2023. It explains the reasons behind the success of active managers in these sectors, such as the inefficiencies in the real estate and bond markets. The article also includes insights from industry experts and data from Morningstar to support its claims. Overall, the article stays on topic, supports its claims with evidence, and provides actionable insights for investors.
Financial Relevance: Yes
Financial Markets Impacted: Real estate funds
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article discusses the performance of actively managed bond and real estate funds compared to passive funds. It provides insights into why these active funds fared better and mentions specific funds that were top performers. However, there is no mention of any extreme events or their impact.
Public Companies: Morningstar (Unknown), VanEck (Unknown)
Key People: Bryan Armour (Director of passive strategies research for North America at Morningstar), Matthew Siegel (Head of digital assets research at VanEck), Judith Lu (CEO of Blue Zone Wealth Advisors)
www.marketwatch.com 
