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What’s in Your Bond Portfolio?
There doesn’t seem to be a limit to the complex fixed-income instruments investment firms can create. In response to this endless supply of complex securities, bond managers also have begun to create more sophisticated investment approaches. Many are using tools and strategies that were much less common five or 10 years ago. This evolution has made it challenging for plan sponsors to keep up with the pace of change in their managers’ bond portfolios. Although investors may think that they hold a traditional basket of bonds, often that basket also includes significant exposures to derivatives and leverage which the investor may not realize are part of the strategy.
On April 10, Watson Wyatt held a web conference to discuss how fixed income managers are using their derivatives and leverage and what might be in your bond portfolio.
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