The Bloomberg Aggregate Bond Index tracks roughly $30 trillion of a global bond market closer to $160 trillion, according to Bloomberg Professional Services data from January 2026. Securitized product specialist Jeff Katz contends that benchmark-driven fixed income leaves investors capturing only a third to a half of the investable opportunity set. First Pacific Financial co-chief investment officer Brandon Treasure argues that the concentration risks inside the index are greater than many advisors assume.
The Bloomberg Aggregate is an investment-grade, fixed-rate index covering government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. Jeff Katz, securitized product specialist in TCW's fixed income group, is direct about its limits: "The Bloomberg Agg is pretty narrow in scope. It's only about $30 trillion. So you really only capture about a third to a half of the opportunity set." iShares data shows Treasuries now represent about 40 percent of the index. Entire sectors, including high-yield bonds, emerging market debt, and many securitized assets, sit outside it altogether. Measuring the bond market and investing in it are increasingly two different exercises.
TCW argues that the Bloomberg Agg has become a useful benchmark but an increasingly incomplete map. As government borrowing has expanded, Treasury concentration inside the index has grown. Brandon Treasure, co-chief investment officer at First Pacific Financial, says there is "maybe a naivety that the Agg is the most diversified piece of the fixed income market." A portfolio tracking the index reflects those weights directly. More government issuance means greater concentration, not necessarily greater diversification. The question shifts from whether fixed income belongs in a portfolio to how it should be constructed.
The shock of 2022 continues to influence investor behavior. Many remain reluctant to revisit fixed income even though the backdrop has shifted materially. Treasure sets the contrast plainly: "If you go back five-ish years ago, I think the 10-year Treasury was sub 1 percent. Fast-forward today, and you're close to 4.5 percent. So it's a much different environment than it was just a few years ago. You don't have to stretch too far in terms of credit or duration to get a pretty good return." Income matters again, but so does resilience. Corporate bonds may still offer income that looked attractive recently, but tighter spreads leave less compensation for assuming additional credit risk.
Securitized credit covers residential mortgages, commercial mortgages, auto loans, credit card receivables, and other consumer-backed assets. Katz explains the structural appeal: "Whether it's residential mortgages, commercial mortgages, auto loans, or credit cards, these are all parts of people's everyday lives. You're not taking exposure to one company; you're investing across thousands of underlying borrowers." TCW has more than 20 analysts focused exclusively on securitized markets. A dedicated New York team covers private issuance. Extra yield in these assets may reflect structural complexity, not necessarily weaker credit quality. That difference demands closer scrutiny of borrower behavior, collateral quality, and transaction structure, not just a single balance sheet. The true distinction is owning assets that respond to different economic forces, not just owning more securities.
TCW manages roughly $206 billion across global sovereign debt, investment-grade and high-yield credit, and one of the industry's larger securitized businesses. Conviction moves between sector allocation, security selection, and structure depending on where the market compensates investors for the risks taken. Katz notes the pace has shifted: "In today's world, with information and technology, these opportunities tend to change much more rapidly and the cycles tend to be shorter. Being able to be flexible and take advantage of those dislocations becomes much more important." "The ability to have a platform that has the scale and scope and breadth and depth to be able to analyze not only corporations but consumers really provides us with an opportunity," Katz says. TCW has more than 50 years of experience as a privately held, global asset manager.
Process repeatability matters as much as performance. Treasure values candor above almost everything else. His standard: "You want the manager that's spreading out their active bets in a way that even if they make a slight misstep, your strategy is going to perform like you expect it to." Large ETF allocations bring practical considerations that rarely appear on a factsheet. A strategy may carry an attractive long-term record, but if entering a $15 million or $20 million position materially moves the market, that cost comes directly out of the client's return. Liquidity and bid-ask spreads are part of the investment case, not an operational afterthought.
Active fixed income ETFs have grown quickly in popularity. The wrapper question, Katz says, is secondary: "We're wrapper agnostic. It's the same investment team, it's the same process, it's the same philosophy, just in a different wrapper." Treasure notes that out-of-index securities "may carry a complexity premium or are simply out of favour and not included in a broad index," offering one route to incremental return. Katz advises: "You really need to look outside and think about a broader landscape; avoid adding incremental risk in a very narrow scope." The goal, Treasure says, is constructing portfolios with multiple sources of income and diversification that can perform across a range of market environments. Yield alone is not the objective. Related analysis and sponsored reports are available through InvestmentNews premium content.
Jeff Katz: securitized product specialist, fixed income group, TCW; part of a platform managing roughly $206 billion across global sovereign debt, investment-grade and high-yield credit, and securitized assets; TCW has more than 50 years of experience as a privately held, global asset manager.
Brandon Treasure: co-chief investment officer, First Pacific Financial.