They are headed up and you will lose money in long maturity bonds if you own them.
If interest rates shoot up, people holding long-maturity bonds can see 20% or even 40% losses in market value.
He was also sure that interest rates had to go up from here and that longer maturity bonds would decline.
As a result of that meeting, the Fed announced Operation Twist, a plan to swap shorter-maturity bonds for longer-dated instruments.
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Investors gravitated toward longer maturity bonds in an effort to secure higher coupons since older investors often rely on interest payments to sustain their income.
Since longer-maturity bonds offers higher yield in the current market, this kind of debt is mostly purchased by mutual funds, which want to offer a high-yield product to investors.
The Transport Industry Pension Fund of the Netherlands sold Greek bonds last year, followed by Spanish bonds and then short-maturity bonds of Italy, according to its chief investment officer, Patrick Groenendijk.
Sean Greene assured me that none of this will cost taxpayers a dime, because the government simply guarantees loans 10-year maturity bonds raised from private investors at rates slightly above par.
The National Development and Reform Commission, the top economic planning agency, is in charge of long-maturity bonds typically issued by major state-run enterprises, while the securities regulator runs a separate exchange-based bond market for listed firms.
An investor seeking to create a core portfolio holding of intermediate-maturity municipal bonds could allocate among two or three intermediate mutual funds benchmarked to those indices.
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When held to maturity, bonds provide return of capital.
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On Thursday, the bank said it would increase its purchases of Japanese government bonds and extended the average maturity of the bonds it purchases from three years to seven years.
If you're borrowing to invest in muni bonds, just match the mortgage to the maturity of the bonds you are buying.
Fuss told the Journal that he reduced the average maturity of corporate bonds, from 10.5 years out, to less than 9.5 years.
Examples: University of Texas munis, due August 2030, bought at 5.8% yield to maturity, and bonds issued by New York City Transitional Finance Authority, due November 2027, bought at 5.75% yield to maturity.
Second, bonds offer return of capital when held until maturity. (Corporate bonds are not completely without risk, so be sure to monitor the fiscal health of the issuer.) Finally, bonds have historically had low correlations with stocks. (When stock prices zig, bond prices often zag.) Thus, even in the current low-yield environment, bonds should not be ignored.
The idea draws on a similar exemption for bonds that life insurers plan to hold to maturity, even though, unlike bonds, equities do not mature.
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The Hall-Sargent calculations show that almost all of this inflation tax was borne by those who held bonds with a maturity of five years or more. (That is because investors in short-term bonds could more quickly demand higher interest rates to compensate for inflation.) The trick is harder to repeat today.
Securities firms argue that this need not matter as long as investors hold the bonds to maturity.
The fdic guarantees the bonds through maturity, but after June 2012 it reserves the right to call them.
Chances are, in other words, that anyone hanging on to such bonds until maturity will not get their money back.
For hedge funds and other investors which will not be holding bonds to maturity, currency movements may determine their return.
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Accordingly, Soviet willingness or ability to redeem bonds at maturity could directly affect the economic well-being of those who hold such Soviet debt instruments.
For example, an SMA portfolio manager can arrange bonds across maturity schedules so that 20% of them mature each year over the next five years.
When one starts to get aggressive in seeking out yield in today's environment on the fixed-income side, one can easily find themselves losing the "safety" aspect traditionally associated with holding individual bonds to maturity.
The new bonds' long maturity and low interest rates should make debt service manageable.
Look around for bonds or bond funds that you can sell and replace with bonds of shorter maturity.
Bonds with a maturity of more than ten years account for a third of the value of all outstanding bond issues.
One approach to protecting yourself is "laddering, " or buying individual bonds with staggered maturity dates so funds can be reinvested at higher yields as rates go up.
Most bonds are held until maturity, so an active secondary market is typically not available for them.
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