Fixed-income arbitrage is an investment strategy generally associated with hedge funds, which consists of the discovery and exploitation of inefficiencies in the pricing of bonds, i.e. instruments from either public or private issuers, yielding a contractually fixed stream of income.
Most arbitrageurs who employ this strategy trade globally.
In pursuit of their goal of both steady returns and low volatility, the arbitrageurs can focus upon interest rate swaps, US non-US government bond arbitrage, see US Treasury security, forward yield curves, and/or mortgage-backed securities.
The practice of fixed-income arbitrage in general has been compared to "picking up nickels in front of a steamroller".
Famous quotes containing the words fixed and/or income:
“The permanence of all books is fixed by no effort friendly or hostile, but by their own specific gravity, or the intrinsic importance of their contents to the constant mind of man.”
—Ralph Waldo Emerson (1803–1882)
“There are few sorrows, however poignant, in which a good income is of no avail.”
—Logan Pearsall Smith (1865–1946)