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    Bond Management Strategies

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    Manju Mudakavi
    There are two types of bond management strategies: passive and active. The passive approach involves buying and holding bonds to maturity in a buy-and-hold strategy, ignoring changes in capital value. This strategy is used by income-maximizing investors like retired persons and funds. The active approach involves switching bonds as market conditions change. Bond laddering involves buying bonds that mature at different dates in the future to reduce risks from interest rate changes.

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    Bond Management Strategies

    Uploaded by

    Manju Mudakavi
    1K views5 pages
    There are two types of bond management strategies: passive and active. The passive approach involves buying and holding bonds to maturity in a buy-and-hold strategy, ignoring changes in capital value. This strategy is used by income-maximizing investors like retired persons and funds. The active approach involves switching bonds as market conditions change. Bond laddering involves buying bonds that mature at different dates in the future to reduce risks from interest rate changes.

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    There are two types of bond management strategies: passive and active. The passive approach involves buying and holding bonds to maturity in a buy-and-hold strategy, ignoring changes in capital value. This strategy is used by income-maximizing investors like retired persons and funds. The active approach involves switching bonds as market conditions change. Bond laddering involves buying bonds that mature at different dates in the future to reduce risks from interest rate changes.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    1K views5 pages

    Bond Management Strategies

    Uploaded by

    Manju Mudakavi
    There are two types of bond management strategies: passive and active. The passive approach involves buying and holding bonds to maturity in a buy-and-hold strategy, ignoring changes in capital value. This strategy is used by income-maximizing investors like retired persons and funds. The active approach involves switching bonds as market conditions change. Bond laddering involves buying bonds that mature at different dates in the future to reduce risks from interest rate changes.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 5

    Presentation by

    Vasuki
    Veerendragouda
    Vijay patil
    Vani
    There are two types
    • 1) Active bond management strategies
    • 2) Passive bond management strategies
    • Bond investors may adopt passive or
    active approaches to the management of their
    portfolios. The passive approach is usually
    identified with a buy-and-hold strategy. Active
    bond mgt involves switching and swapping
    bonds as circumstances change in the markets
    for fixed-income securities.
    Buy-and –hold strategy
    • A buy-and-hold strategy essentially means purchasing
    and holding a security to maturity or redemption (eg:by
    the issuer via a call provision) and then reinvesting cash
    proceeds in similar securities
    •
    • By holding securities to maturity, any capital change
    resulting from interest change is neutralised or
    ignored( by holding to maturity the par amount of the
    bond will be received)
    •
    • The passive or buy-and-hold strategy is used primarily
    by income-maximizing investors like reired
    persons,endowment funds, bond mutual funds and
    insurance companies.
    Bond ladder strategy
    • Building a bond ladder means buying
    bonds scheduled to come due at several
    different dates in the future, rather than all
    in the same year

    • Bond laddering is a smart-investment


    concept for conservative individuals who
    are unsure of interest rate movement and
    are afraid to bet on any one forecast.

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