[trailrunner46]

Most of the AUM are in portfolios that are benchmarked to something (Barclays/Bloomberg US Aggregate for example). Although recently there has been a surge in unconstrained bond funds which have more latitude in terms of what they hold and with a looser benchmark. Managers start with a benchmark and then make 2 main choices. 1) how much should I deviate in terms of asset type exposure (benchmark is 40% IG corporate, should I do 50% and overweight?) and 2) within each asset type exposure which securities should I select (within my IG corporate sleeve should I choose the newly issues IBM bonds, old issue IBM bonds, Apple?, etc). Most managers are still pretty manual so the are doing deep securit research and are picking company A over company B but there is some movement to a more quant approach where you pick metrics and do a broad screen across all of those companies. The data across all of the bonds especially outside of just investment grade is hard to get access/clean so that has been a barrier to entry for a while. As the data becomes more available more managers will be using screens like has been commonly been done in equities.