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Given this very asymmetric risk/return profile, an unconstrained bond manager may choose to tactically limit interest rate risk, while most traditional bond strategies are required to maintain a level of positive interest rate exposure that is similar to their market index, even when interest rates are rising.
Comments
Rate chart is for indices sans expense ratios
http://media.pimco.com/PublishingImages/PIMCO_Featured_Solutions_Callin_Kim_Fig1.PNG
Pimco's book-talking case for unconstrained bond fund management in today's environment.
http://www.pimco.com/EN/Insights/Pages/An-Unconstrained-Approach-to-Bond-Market-Investing.aspx
Given this very asymmetric risk/return profile, an unconstrained bond manager may choose to tactically limit interest rate risk, while most traditional bond strategies are required to maintain a level of positive interest rate exposure that is similar to their market index, even when interest rates are rising.
Choice of manager is key