Quants Are Taking Over The Bond Market

Quants Are Taking Over The Bond Market

The latest Invesco Ltd. poll indicates that the quant revolution in fixed income is finally here, details an article in Bloomberg. According to the poll, the majority of investors (55%) say they use factor strategies in their bond portfolios—the latest evidence that this crowd is now having a field day in a market long seen as hostile to allocation methods.

Investors now believe that slicing bonds by factors like value and price momentum produces outperformance over traditional investing styles, and Wall Street is following along as never before, the article continues. Incorporating factors within fixed income strategies is being seen as a helpful way to navigate through this volatile period.

The Invesco poll also found that the once-disdained value strategy has regained favor in the equity world. Other highlights of the poll were 87% of those polled say they allocate to the factor, 48% say they factor in environmental, social and governance concerns, and 57% say they plan to maintain factor allocations over the next 12 months.