Bond Market

Alfred Lee: Do Passive Strategies Still Make Sense for Fixed Income?

Alfred Lee, Portfolio Manager and Investment Strategist, BMO ETFs takes on the notion of whether it makes sense to take an active approach or remain in passive strategies, given the rising rates environment. We sat down with Alfred Lee at the Inside ETFs Conference in Montreal.

"Given that we've been in a 30-year bull market in bonds, one of the big concerns is that because we have rising interest rates, the big question is, "Should you remain in a passive strategy?"," says Lee. "In the last couple of years we've seen active ETFs gain a lot of traction, and the common story has been, in a rising rate environment, you don't want to be in a passive ETF. We offer both active and passive ETFs, so our viewpoint is a little less biased."

"In a rising rate environment, one thing to keep in mind is that, the Canadian fixed income market, as a 7.5 duration, so a lot of people assume that that duration is going to hurt you, but, last year was a good example where rates on the short end rose, but on the long end, they actually went down," says Lee.

Our conversation continues on Alfred Lee's outlook for fixed income, interest rates and the economy, as well as what he sees are pockets of opportunity and positions for both growth and risk management.

In addition, we discuss preferred shares.

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