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Politics : Ask Michael Burke

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To: Michael Bakunin who wrote (77243)	3/8/2000 10:17:00 PM
From: Tim McCormick	Read Replies (1) of 132070

The 5 year has always been the "stepchild" of the curve. It's too short to meet the duration bogie of longer bond buyers and too long for those with liquidity paranoia. For retail investors it is often the best risk adjusted value. It is neglected by those wishing to make a changing curve bet because the curve slope often pivots around it. It is no man's land. It is also perceived to be the governments funding maturity of choice. It is part of the mortgage production hedge as lenders short a 5Y/10Y blend to match the duration of mortgage securities. On a risk adjusted basis a portfolio of rolling 5 years almost always outperforms because of this status. Tim

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