The risk in the duration trade

Image Credit: investopedia.com

August 3, 2020/Coronation Report

Talking with clients about our report ‘Navigating the Capital Market; the Investors’ Dilemma’, 14 July 2020 we sometimes hear back that Federal Government of Nigeria bonds are safe while equities are risky. Is this entirely true? Buying long-dated FGN bonds has been profitable this year, but what if interest rates were to rise? Bond holders might experience mark-to-market risk that reminds them of equities.

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