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BOND PORTFOLIO MANAGEMENT STRATEGIES - Coggle Diagram
BOND PORTFOLIO MANAGEMENT STRATEGIES
BOND MANAGEMENT
Management of a bond portfolio either :
to maintain a certain return regardless of changes in those factors
increase returns based on anticipated changes in these bond-pricing factors
BOND STRATEGIES
Passive
involve setting up a bond portfolio with specific characteristics that can achieve investment goals
Active
to take advantage of expected changes
to take advantage of expected changes in the bond market
PASSIVE PORTFOLIO STRATEGIES
Buy and hold
based on the objectives and constraints
can by modified by trading into more desirable positions
Indexing
to construct a portfolio of bonds
performance analysis involves examining tracking error
ACTIVE MANAGEMENT STRATEGIES
Bond swaps
involve liquidating a current position and simultaneously buying a different issue in its place with similar attributes but having a chance for improved return
Bond swaps types
Pure yield pick up swap
Substitution swap
Tax swap
Yield spread analysis
assumes normal relationship exist between the yields for bonds in alternative sectors
Credit analysis
involves detailed analysis of the bond issuer to determine expected changes in its default risk
Valuation analysis
the portfolio manager attempts to select bonds based on their intrinsic value
Interest rate anticipation
barbell strategy splits funds between short and long duration securities
ladder strategy staggers maturities
risky strategy relying on uncertain forecasts