Portfolio trading (PT) continued its rapid expansion in 2025, with Morgan Stanley reporting total capped volumes in US markets reaching approximately US$1.3 trillion, a 52% increase year-on-year. Activity was evenly split across the two halves of the year, though momentum was strongest in high yield (HY), which consistently set new volume records. Monthly trading peaked in March and April amid tariff‑related volatility, while July delivered the highest volumes of the second half.
PT’s share of overall corporate bond trading also climbed meaningfully. After remaining stable through early 2025, PT penetration peaked at 17% in July and ended the year at 16%, lifting the full‑year share to 15%—up from 11% in 2024. Using Bloomberg’s scaling methodology to estimate uncapped trades, Morgan Staney estimates total PT volumes reached roughly $1.8 trillion, up from $1.1 trillion the prior year.
Investment‑grade (IG) PT volumes remained the largest by absolute size, rising 44% year over year to $1.1 trillion. However, IG momentum faded in the second half, with H2 volumes down 3% versus H1 and a notably weak fourth quarter which had historically been a strong period, leading to a slight decline.
HY, by contrast, accelerated throughout the year. HY PT volumes more than doubled (up 116% YoY), with H2 volumes rising 15% over H1 . Fourth‑quarter HY activity reached a record $56 billion, making it the strongest quarter of 2025. HY PT’s share of total HY trading climbed to 18% in December and 16% for the full year, surpassing IG’s PT share by 1.5 percentage points.
Overall market wide IG and HY trading volumes grew at a slower pace in 2025. In IG, the bank estimates the trailing 12-month trading volume increased by 5% over the year, and reached $9.6 trillion by the end of January.
HY trading volume, on the same 12 month trail, grew significantly faster than IG, rising by 12% since the beginning of the 2025 to reach the highest on record, wcih was set in 2021.
This year’s analysis reflects FINRA’s enhanced TRACE reporting rules, which since May 2023 require explicit identification of portfolio trades. The dataset used by Morgan Stanley is reported by the bank to be more robust than prior estimation‑based approaches, though historical comparisons still rely on earlier methodologies for directional context.
©Markets Media Europe 2025
