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A bond exchange-traded fund (ETF) can use different portfolio strategies that can be tailored to each investor’s needs. Some funds may purchase only short-term bonds , reducing interest-rate ...
4 strategies for diversifying your bond portfolio. A bond is a type of debt security in which a company, government or government agency agrees to pay back the borrower a certain amount of ...
While a bond ladder strategy can be effective, there are other bond strategies investors might also consider. These include a barbell strategy, which focuses on short- and long-term bonds while ...
A barbell strategy is one of several different types of portfolio strategies that is designed to create a reasonable return on the investments that are part of the asset portfolio. The barbell strategy is built around the concept of focusing on the maturities of the securities in the portfolio by making sure the maturity dates are either very ...
Frank Redington is generally considered to be the originator of the immunization strategy. Redington was an actuary from the United Kingdom. In 1952 he published his "Review of the Principle of Life-Office Valuations," in which he defined immunization as "the investment of the assets in such a way that the existing business is immune to a general change in the rate of interest."
A financial advisor told me the pros of building a two-part bond ladder (three-year Treasurys and 10-year corporates) to generate fixed income and cover required minimum distributions (RMDs).
A bond portfolio strategy known as immunization takes advantage of these offsetting effects. [6] As Thau and finance scholar Dr. Frank Fabozzi have observed, securities with a longer term to maturity carry greater reinvestment risk. The same is true of bonds with high coupon rates. [7] [8] [9]
Despite the various ways to set up a portfolio, you can estimate a return on an all-bond portfolio by looking at current yields. For example, a triple-A rated corporate bond you can expect a yield ...
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