Fixed income arbitrage strategy enjoys improved environment and opportunities for 2012

Exploiting opportunities

Volatility arrows2

Fixed income arbitrage strategies, which attempt to exploit mispricing among fixed income securities, have been among the best performers in 2011. Bond market volatility provided a wealth of opportunity for a smaller group of managers, who should be largely unexposed to market direction.

Loose monetary policy, expected to continue for some time and particularly in the US, should provide numerous catalysts for fixed income relative value managers. As uncertainty and volatility prevail, the inheren