Rethinking Fixed Income

Bloomberg Barclays US Aggregate Bond Index (the Agg) has grown to become one of the most popular measures of the US bond market. The index’s popularity and its construction have important implications for investors.

The high-quality tilt and diversity across sectors have underpinned the US Agg’s role as a core holding in multi-asset portfolios. The index’s historical performance during equity sell-offs further bolsters its reputation as a source of ballast.

The Agg has been a source of defense during equity selloffs

Past performance does not guarantee or indicate future results. Source: Bloomberg. Financial Crisis measured 10/10/07 – 3/9/09, U.S. Credit Rating Downgrade measured 7/25/11 – 10/3/11, Energy and EM Downturn measured 7/21/15 – 2/11/16, Fed Policy Reaction measured 10/3/18 – 12/24/18, COVID-19 Crisis measured 2/20/20 – 3/23/20. Index performance is for illustrative purposes only. It is not possible to invest directly in an index.

Due to its construction, the composition of the index has changed over time with respect to duration, yield, and sector weights. In light of this evolution, as well as the current market outlook, multi-asset investors at BlackRock are exploring a variety of options to incorporate ballast and income in portfolios.

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Rethinking fixed income

The Agg has been a source of defense during equity selloffs

Download the full paper