- Fixed income arbitrage
Fixed-income arbitrage is an
investmentstrategy generally associated with hedge funds, which consists of the discovery and exploitation of inefficiencies in the pricing of bonds, i.e. instruments from either public or private issuers yielding a contractually fixed stream of income.
arbitrageurs who employ this strategy trade globally.
In pursuit of their goal of both steady returns and low volatility, the arbitrageurs can focus upon
interest rate swaps, US non-US government bond arbitrage, see US Treasury security, forward yield curves, and/or mortgage-backed securities.
The practice of fixed-income
arbitragein general has been compared to that of running in front of a steam roller to pick up nickels lying on the street [http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1254&context=anderson/fin] .
Long-Term Capital Management
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