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Bullet Strategy

Moneyzine Editor
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Moneyzine Editor
1 mins
January 9th, 2024
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Bullet Strategy

Definition

The term bullet strategy refers to an investment approach involving the purchase of fixed income securities that mature in the same timeframe. The bullet strategy is oftentimes used by investors that need funds on a certain date.

Explanation

The bullet strategy involves the purchase of fixed income securities with similar maturity dates. The term bullet is derived from the relatively narrow focus of the investment portfolio. The approach is frequently used when the investor needs the funds in a certain timeframe. For example, the bonds may be used to pay for a wedding, fund a college education, or pay off a mortgage.

When executing the bullet strategy, the investor will purchase assets over an extended period of time. This allows the investor to take advantage of any opportunities the market presents, as well as diversify their bond portfolio. Since interest rates may fall as assets are accumulated over time, the investor must closely monitor the market.

Related Terms

  • Harvest Strategy
    The term harvest strategy refers to the planned discontinuation of new investments in a line of business or product so the maximum profits can be extracted from it. Harvest strategies are oftentimes used when a product is nearing the end of its lifecycle, or the usefulness of a service is nearly over.
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  • Fixed Income Strategies
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  • Bond Ladder Strategy
    The term bond ladder refers to an investment strategy involving the purchase of fixed income securities with staggered maturity dates. The bond ladder strategy helps investors to manage interest rate risk and provides them with the opportunity to make a series of reinvestment decisions over time.
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  • Barbell Strategy
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