Why Bond Funds Benefit from Active Management

Active management can still win in the bond market. Opportunities abound for active managers to best their passive peers and benchmarks. And here’s why: they have access to tools, asset classes, and flexibility that their competition does not. Right now, the bond market is ripe for them to succeed. A deep dive in Morningstar Magazine’s first quarter 2026 issue makes the case why everyday investors should consider adding active bond funds to their portfolio. Eric Jacobson, senior principal of fixed-income strategies for Morningstar, and Maciej Kowara, principal of fixed income strategies for Morningstar, co-authored the article. Subscribe to Morningstar Magazine to read independent investment research for free. On this episode: 00:00:00 Welcome 00:01:33 Why Active Management Still Works in Bonds 00:02:25 Who Trades in the Bond Market 00:03:18 Finding Inefficiencies in Fixed Income 00:04:26 When Passive Bond Funds Can Hurt Investors 00:06:01 How to Spot a Good Active Bond Fund 00:08:10 What Gives Active Managers an Edge   Watch more from Morningstar: These Top Tech Stocks Can Stand Up to AI Risks 2 Cautionary Tales from Private Equity and Private Credit Markets Are You Ready for Tax Day? Here’s What You Need to Know Before You File   Follow Morningstar on social: Facebook https://www.facebook.com/MorningstarInc/ X https://x.com/MorningstarInc Instagram https://www.instagram.com/morningstarinc/?hl=en LinkedIn https://www.linkedin.com/company/morningstar/posts/?feedView=all Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.