Revenue Rise with Loans

Clearly investors willing to allocate a part of their budget to corporate bonds are facing two questions. First, they have to decide how much of their budget they want to invest in corporate bonds. In this context we will focus on a pure fixed income portfolio. Usually private as well as institutional investors define their long-term asset allocation with respect to the asset classes such as stocks, bonds and real estate in a preliminary process.

The second decision concerns the sector allocation of the portfolio which is part of the tactical asset allocation. As noted before, the sector allocation of a corporate bond portfolio essentially determines its risk/return profile and portfolio beta.