CHAPTER 6
Bond Investment Strategies
Introduction
Bond investment strategies can be classified as active, passive, or hybrid. Active strategies involve taking speculative positions in which the primary objective is to obtain greater returns. This might include taking a long position in longer duration bonds in anticipation of a decrease in long-term rates, investing in Treasury securities based on the expectation of the Fed's implementing an expansionary monetary policy, or investing in lower-quality bonds in hopes of future economic growth. Active strategies also include defensive strategies in which the objective is to protect the value of a bond investment. For example, to minimize the potential decrease in a bond fund's value from an expected ...
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