Bond funds made losing derivatives bets as rates climbed
Some managers’ use of interest rate derivatives looks like ill-timed speculation, study finds
Certain US bond funds have been using derivatives to bet on rate changes more than investors might realise. That’s according to a new study from academics in the US and Australia.
About half of trading by the funds in swaps, futures and other interest rate derivatives appears to be speculation rather than hedging, the research found, based on a classification devised for the statistical analysis.
What’s more, the bets that some bond funds made seem to have turned out badly – contributing to
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