Bond Immunization

Bond Immunization is a strategy to protect investors' bond portfolio from any

change in interest rates.

This is done by adjusting the portfolio duration to match th investment time horizon.

Interest rates impact bond prices inversely. When interest rates go up, bond prices go down and vice versa.

Bond immunization ensures that the investor receives fixed rate of return over a specific period of time irrespective of any change in interest rates.

It is to be noted that immunity towards interest rate fluctuations is possible only if investment is locked in during the investment horizon.

Fixed maturity plans (FMP), offered by mutual funds, can be a type of bond immunization strategy as the portfolio duration is adjusted to the investment period.

Despite volatility in interest rates, returns in FMPs are almost fixed on maturity.

Name: Praful Patil

Firm Name: PATIL INVESTMENTS

Mobile: 9833473537

Email: praful@patilinvestments.co.in