Overview
Fixed income portfolio management is similar to general portfolio management of financial instruments, however, there are additional complexities that make fixed income portfolios challenging.
First, fixed income risk tends to be a vastly more complex and technical field than risk of other financial instruments. Second, the goals of managing a fixed income portfolio can be different than managing a portfolio of assets such as equities. In particular, a fixed income portfolio may be designed primarily to meet a set of future cash obligations, and necessarily to maximize portfolio value.
Immunization
Immunization is the process of managing a portfolio that is designed to meet a set of future obligations in such a way that the ability of the portfolio to meet those obligations is not materially affected by changing interest rates.