Yield Pickup (redirected from Yield Pick-Up)

Yield Pickup

The extra yield an investor receives when he/she exchanges a bond with a lower yield (and usually a shorter maturity) for one with a higher yield (and usually a longer maturity). While this exchange sounds advantageous, it is risky because the yield pickup often comes from a bond with lower credit quality, and the longer maturity likewise exposes the investor to interest rate risk. However, the yield pickup is still a guaranteed higher return, and many investors take advantage of them. See also: Pure yield pickup swap.