Originally Posted by MichaelB
Insurance companies, pension funds and banks with mandates in their charter to invest a minimum or fixed allocation in sovereign AAA bonds.
This is the kind of thing that distorts indexing--whenever a mandate exists that effectively disconnects the price of an asset (stock or bond,etc) from the market value that free buyers are willing to pay. Because, the buyers aren't free to make their own judgements. Some of these mandates you mention are the result of government requirements--the same governments that are served by artificially depressing the effective interest rates for their bonds.