Yield Pickup

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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.
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Plus, there are "currency adjusted yield pickups" of 70 basis points -- accomplished by selling 10-year Japanese government bonds or German Bunds and buying U.S.