All throughout my career I have heard the mantra of “laddering portfolios.” Laddering maturities means to buy a series of bonds over time so that regardless of whether interest do, there will soon be a bond maturing and one can reinvest the proceeds at the new interest rates. This is cowardly. This also provides the investor with the lowest common denominator in terms of yields.
Interest rate investing
Instead, simply look at the treasury yield curve.Find the point where one gets the most yield for your money and buy bonds clustered around those maturities. The portfolio manager should seek to buy them at par or a discount. If rates go up, you know you aren’t losing your principal value because you own the bonds and bought them at a good price. Simply trim back some of your stock holdings and reinvest those proceeds in bonds at a higher rate. This isn’t too hard of a concept, and one is being opportunistic.