Managers who pursue a long/short fixed income strategy aim to make profits from changes in the absolute value of fixed income instruments. They select undervalued fixed income instruments and go long in them hoping they will increase in value.
They then sell short fixed income instruments which they think are overvalued and will decrease in value. If the value movements are correct, they make profits on both sides of the trade.
However, there are many different ways of running this kind of long/sh
The week on Risk.net, August 4–10Receive this by email