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The Power of Swaps to Transform Fixed-Income Portfolios
The Power of Swaps to Transform Fixed-Income Portfolios
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BTCCSquare news:
For the discerning investor, a passive, buy-and-hold approach to fixed-income investing often falls short of maximizing returns. Modern financial markets demand sophisticated tools, and among the most potent are financial swaps. These highly customizable, over-the-counter derivative contracts allow two parties to exchange cash flows, enabling portfolio managers to alter duration, manage credit risk, and capitalize on yield curve dynamics.
Swaps MOVE beyond simple coupon income, monetizing market inefficiencies and forward-looking expectations. The adoption of the Secured Overnight Financing Rate (SOFR) has further modernized the swaps market, offering new opportunities for yield enhancement in fixed-income portfolios.
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