There are three ways to invest in bond portfolios. The basic routine of bond investment and stock investment is the same, that is, first decide whether to actively intervene by judging the overall market trend, and then select individual bonds according to specific market conditions when the overall direction is determined.

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However, a meso-level portfolio strategy can also be added to this, that is, when the general direction is determined, bonds of different maturities are selected to form an asset pool.

The overall change trend of the yield curve is the basis for us to judge the overall market trend, so once we believe that the macro economy is overheating and the central bank is likely to regulate the economy through tightening monetary policies such as raising interest rates, this means that the overall yield curve will

Moving upward corresponds to the overall decline of the bond market. Therefore, it is necessary to adopt a conservative investment strategy at this time, shorten the duration of the bond portfolio, and focus investment on short-term varieties. The opposite is true on the contrary.

Why do we add the concept of a combination to this? Because the changes in the bond yield curve do not move in parallel as a whole. The local changes in the curve are more prominent. It is the normal state of the yield curve to drive changes in the overall yield curve.

This normality causes certain parts of the curve to often be unbalanced with other parts, and this imbalance provides conditions for us to concentrate on investing in bonds of certain maturity periods.

There are three main methods for bond combination: dumbbell type, bullet type or ladder type.

The so-called dumbbell-shaped portfolio focuses on investing in bonds with shorter maturities and bonds with longer maturities, while weakening investment in medium-term bonds. It is shaped like a dumbbell.

The bullet-shaped portfolio focuses on investing in bonds of medium maturity. Because the middle protrudes, it is called a bullet-shaped portfolio.

A ladder-type portfolio means that when the convex parts of the yield curve are evenly distributed, investments are concentrated in bonds with the maturity of these convex parts. Since their remaining years are equally distributed, they exactly form the shape of a ladder.