An accomplished Chicago banking executive, Colin Robertson serves as executive vice president of Northern Trust in Chicago where he heads the fixed income division. Besides his management role, Colin Robertson closely associates with both internal partners and customers to discuss fixed income and bonds.
Structuring a bond portfolio involves several passive investment strategies such as bond laddering. Bond laddering is one of the most common passive bond investing techniques where a portfolio is divided into equal parts and investment is done in a laddered style. An investor purchases several bonds with consecutive maturities over a specified time period.
This investment strategy comes with advantages associated with blending high long-term rates with short-term liquidity. As each bond attains its maturity, proceeds are reinvested in a new bond whose maturity corresponds with the longest term bond on the ladder which can potentially offer the highest yield.
A laddered bond portfolio allows diversification which reduces risks, allows for reinvestment flexibility, and improves yields. Bond ladders with noncallable bonds are often more predictable. Noncallable are financial securities that can’t be redeemed early by the issuer without payment of a penalty and have a locked interest rate.
Structuring a bond portfolio involves several passive investment strategies such as bond laddering. Bond laddering is one of the most common passive bond investing techniques where a portfolio is divided into equal parts and investment is done in a laddered style. An investor purchases several bonds with consecutive maturities over a specified time period.
This investment strategy comes with advantages associated with blending high long-term rates with short-term liquidity. As each bond attains its maturity, proceeds are reinvested in a new bond whose maturity corresponds with the longest term bond on the ladder which can potentially offer the highest yield.
A laddered bond portfolio allows diversification which reduces risks, allows for reinvestment flexibility, and improves yields. Bond ladders with noncallable bonds are often more predictable. Noncallable are financial securities that can’t be redeemed early by the issuer without payment of a penalty and have a locked interest rate.
