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A Day In The Life Of A Bond Index Portfolio Manager

Mar. 07, 2018 2:50 PM ET1 Comment
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Fixed income exchange-traded funds (ETFs) have continued to gather assets in 2018 as many investors are discovering their low cost and tax efficient benefits for the first time. But there are still a lot of misunderstandings out there, like this one: a bond index fund is a black box that robotically buys and sells bonds at the mercy of active investors. Nothing could be further from the truth.

Portfolio managers at iShares are bond market specialists, managing ETFs with the goal of tracking a bond index. And that's not as easy as it sounds. To go behind the scenes of the making of a bond ETF, I'm talking to James Mauro and Karen Uyehara. James manages all the iShares bond ETFs as well as the broader ETF portfolio management team. Karen is a multi-sector portfolio manager who works on the day-to-day management for over $180 billion of assets (Source: BlackRock, as of 1/31/2018).

Schenone: What's a typical day like managing a bond ETF? Walk us through what happens when you get into the office. What is your biggest concern about the ETFs?

Mauro: With growing trading volumes in bond ETFs, it is critical that we leverage technology to help scale our investment process. I focus on how to strengthen the trading process and risk controls to improve the bond ETFs we manage. That's always top of my mind.

Uyehara: The first thing I think about in the morning is risk-risk in the portfolios and risk in the market. I look at Aladdin reports to check that all of my funds are in line with where I expect them to be. I also look at how the market is moving and think about how that may impact the management of the portfolios.

Schenone: How does technology help you make decisions about security

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