The US market has been transformed by portfolio trading (PT) this year, with estimates that PT makes up somewhere between 25-40% of dealer-to-client (D2C) activity in credit, depending on the trading which is counted. Major buyside firms are now also applying PT to their rates trading and finding it effective, with Legal & General Asset Management conducting its first trade this year, as an example.
However, PT has its critics. Its effectiveness at filling an order is seen by some heads of trading as only a partial measure of best execution, and the wrong metric to use for some trades. The primary concern is that traders will use it for convenience rather than optimising for other metrics such as best price.
Analysis by Morgan Stanley has found that estimated investment grade (IG) and high yield (HY) portfolio trading volumes were the highest year-to-date in April 2025, representing approximately 10% of total TRACE volumes, which captures non-dealer-to-client trading as well as D2C trading.
This marks a slight dip from full-year 2024 figures of 11%, however, and a downward tick in the use of portfolio trading in the IG markets over 2025, as a proportion of total trading.

In IG, capped portfolio trading has continued a decline that began in January 2025. Despite reaching record highs in December 2024, taking 15% of TRACE volumes for the asset class, this figure fell sharply to approximately 10% in January.
Although a slight recovery was seen in March, April results dipped alongside declining trading volumes for the asset class. Reported trades fell from record highs of US$126 billion in March, but remained above monthly averages year-to-date.
By contrast, portfolio trading in the US high yield market continued its steady rise in April to represent 16% of total HY trading volumes.

While overall trading volumes are well below those in the IG market, HY is growing at a more rapid pace – a trend noted by Morgan Stanley in Q4 2024 – and portfolio trading is considerably more well-used in the market.
At Tradeweb, portfolio trading volumes were US$61.6 billion in April. Liane Fahey, head of European institutional credit at the company, observed: “Portfolio trading has become a widely used, reliable method for executing trades and managing risk, particularly during periods of market volatility. As the market continues to evolve, its adoption is likely to continue to expand, as it further embeds itself as an essential part of credit traders’ toolkit.”
Adoption is not only being seen in the US. European portfolio trading volumes exceeded €12 billion at Tradeweb in March – a 78% year-on-year increase, the firm stated.
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