Contingent Immunization


DEFINITION of 'Contingent Immunization'

A method of fixed income portfolio management, whereby managers are granted significant powers of control over the selection of products to be added and removed from the portfolio, as long as the products remain profitable. Should these products become unprofitable past a set threshold, the manager must then capitalize the security under immunization procedures.

BREAKING DOWN 'Contingent Immunization'

Similar to the portfolio insurance methodology used in the equity markets, contingent immunization provides managers with the ability to replace underperforming fixed income assets with better performing ones while restricting their powers in cases where declines in profits occur.

  1. Portfolio

    A grouping of financial assets such as stocks, bonds and cash ...
  2. Portfolio Insurance

    1. A method of hedging a portfolio of stocks against the market ...
  3. Immunization

    A strategy that matches the durations of assets and liabilities ...
  4. Fixed-Income Security

    An investment that provides a return in the form of fixed periodic ...
  5. U.S. Savings Bonds

    A U.S. government savings bond that offers a fixed rate of interest ...
  6. Coupon

    The annual interest rate paid on a bond, expressed as a percentage ...
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