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:
“Popular culture entered my life as Shirley Temple, who was exactly my age and wrote a letter in the newspapers telling how her mother fixed spinach for her, with lots of butter.... I was impressed by Shirley Temple as a little girl my age who had power: she could write a piece for the newspapers and have it printed in her own handwriting.”
—Adrienne Rich (b. 1929)
“There are few sorrows, however poignant, in which a good income is of no avail.”
—Logan Pearsall Smith (1865–1946)