Question: The excerpt that follows is taken from an article titled "Smith Plans to Shorten," which appeared in the January 27, 1992, issue of Bond Week , p. 6:
When the economy begins to rebound and interest rates start to move up, Smith Affiliated Capital will swap 30-year Treasuries for 10-year Treasuries and those with average remaining lives of nine years, according to Bob Smith, executive V.P. The New York firm doesn't expect this to occur until the end of this year or early next, however, and sees the yield on the 30-year Treasury first falling below 7%. Any new cash that comes in now will be put into 30-year Treasuries, Smith added.
What type of portfolio strategy is Smith Affiliated Capital pursuing?