The $260 Billion Mom-and-Pop Funds Distorting the Credit Market

A wall of money worth more than a quarter trillion dollars is changing the face of the corporate bond market and has left unwitting “mom and pop” investors among the main drivers of the cost of capital for the world’s largest companies. Through bond purchases often criticized as indiscriminate they have taken on a role that was once the preserve of highly-paid traders — using intricate bond mathematics — in New York, London and Tokyo.

Triggered partly by social media and financial influencers, this change — the scale of which traders, portfolio managers and credit analysts are struggling to fully understand — is coming not from central bank initiatives, or ...