A common situation for a mutual fund distributor involves a high-net-worth client who is rightfully anxious about a volatile market environment. While linear derivatives like futures allow for a direct hedge, they often...
Consider a HNI client who manages a significant debt-heavy portfolio and demands a 'perfect' hedge against rising interest rates using GOI bond futures. You calculate the hedge ratio based on modified duration and...
Consider a scenario where you have advised an HNI client to hedge their bond portfolio using interest rate futures, relying solely on duration-based calculations. After a sudden, sharp interest rate movement, the client...
A portfolio manager for an HNI client calls you, concerned that the current duration of her ₹50 lakh G-sec portfolio is too high, making it extremely vulnerable to a sharp upward spike in policy rates. While the client...
A common situation for a mutual fund distributor is managing a client’s expectations when their bond portfolio value fails to move in perfect sync with the Interest Rate Futures (IRF) used to hedge it. Consider an HNI...
A corporate client who manages a significant treasury corpus often asks why their liquid fund returns fluctuate despite short-term interest rates appearing stable. As a distributor, you must explain that while liquid...
A corporate treasurer approaches you, confident that she has perfectly neutralized her interest rate risk by shorting 10-year Government of India bond futures against her corporate bond portfolio. While her logic is...