Bond Markets: Two ideas to help guard against rising inflation
Summary
Rising inflation erodes the real value of a bondholder’s investment returns over time. A long-term investment strategy should consider protection against the risk of inflation. Two possible options for inflationary times are inflation-linked bonds and floating rate notes. The paper provides insights into how the instruments are designed to protect fixed-income investors from rising inflation.
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Active Fixed-Income Strategies – Taking advantage of risk premia amid inflation
Summary
Inflation is one of the key risks for which investors want to be compensated. Bond yields, which move inversely to their price, fluctuate according to changes in the different risk premia such as expected inflation. Investors can use relevant instruments including derivatives to generate returns from such volatility. The paper explains how inflation can be an opportunity for active fixed-income investors.