Contingent immunization

Contingent immunization

An arrangement in which the money manager pursues an active bond portfolio strategy until an adverse investment experience drives the then-available potential return down to the safety net level. When that point is reached, the money manager is obligated to pursue an immunization strategy to lock in the safety-net level return.

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Contingent Immunization

An investment strategy in which an asset manager or investor makes investments of varying risk until something goes wrong. When an investment suffers a loss and brings the portfolio down to some pre-defined return, the asset manager or investor begins making low- or no-risk investments that guarantee that same, pre-defined return. A contingent immunization strategy opens an investor up to large returns while minimizing losses as much as possible.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved