The carry of an asset is the return obtained from holding it (if positive), or the cost of holding it (if negative) (see also Cost of carry).
For instance, commodities are usually negative carry assets, as they incur storage costs or may suffer from depreciation, but in some circumstances, appropriately hedged commodities can be positive carry assets if the forward/futures market is willing to pay sufficient premium for future delivery.
This can also refer to a trade with more than one leg, where you earn the spread between borrowing a low carry asset and lending a high carry one; such as gold during financial crisis, due to its safe haven quality.
Carry trades are not arbitrages: pure arbitrages make money no matter what; carry trades make money only if nothing changes against the carry's favor.
Read more about Carry (investment): Interest Rates Carry Trade / Maturity Transformation, Currency
Other articles related to "carry":
... crisis has among its origins the undisciplined use of the carrytrade ... The US dollar and the yen have been the currencies most heavily used in carrytrade transactions since the 1990s ... macroeconomics that larger economies have more immunity to the disruptive aspects of the carrytrade mainly due to the sheer quantity of their existing ...
Famous quotes containing the word carry:
“There must be a world revolution which puts an end to all materialistic conditions hindering woman from performing her natural role in life and driving her to carry out mans duties in order to be equal in rights.”
—Muammar Qaddafi (b. 1938)