Welcome to Money for the rest of us. This is a personal finance show on money, how it works,

how to invest it, and how to live without worrying about it. I'm your host, David Stein. Today is

Episode 523. It's titled, Why It's Easier Than Ever to Invest in the Bond Market. When I became an

institutional investment advisor in the mid-90s, working

mostly with university endowments, private foundations, typically when we got a new client,

they would often have a balanced account manager. It was a separately managed account.

It might have been a local, a regional bank that managed the assets.

And the bond portion of the portfolio might have been a couple dozen bonds.

The focus generally was on income.

There wasn't a huge focus on outperforming a benchmark like the Bloomberg

aggregate bond index, but we would often, as part of the asset allocation and portfolio

construction process, introduce a bond mutual fund that could hold hundreds of bonds and had outperformed the overall bond market,

typically having done better than the local bond manager.

Nine times out of ten, the bond mutual fund that they ended up retaining was the PIMCO

total return bond fund. It was managed by Bill Gross,

and he was incredibly successful at what he did. Most bond management back in the late 90s,

even into the mid-2000s, was actively managed. The management team was actively selecting bond funds. There wasn't that

much allocated to bond index funds and certainly not to ETFs. The first bond exchange traded fund

was introduced by BGI Capital Barclays in the year 2000. It just was not

something that was done. We used mutual funds because firms like PIMCO and others, their

separately managed account minimums were typically $50 million a more. And so it was prohibitively

challenging to get a separately

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