Why active can beat passive in bonds

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.

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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

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