In fixed income, as in all investing, returns are generated by assuming some level of risk. Selecting a fund manager that outperforms similar managers or a benchmark index can feel satisfying, but how do you know if the level of risk that manager took on to achieve those returns was appropriate for your clients’ objectives?
In this episode, Chris and Mike discuss how advisors can evaluate fixed income managers beyond headline returns. They break down concepts like alpha, beta, tracking error, and information ratio that you can use today to make more informed client portfolio decisions, while offering a practical framework for understanding where a manager’s performance comes from, how much risk was taken to achieve it, and whether that approach fits the role fixed income is intended to play within your clients’ portfolios.
Learn more: https://madisoninvestments.com/the-issue-at-hand/
For full disclosures and definitions visit: https://madisoninvestments.com/skill-or-luck-measuring-the-value-of-active-management/
“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.
This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.
Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.
