Enhanced indexing!

CFA Level II Portfolio Management
#1

I’m a bit confused in portfolio management so anyone following the forum will know that I’m asking a lot of questions :smiley:

I do not get the below statement;

"A common strategy in bond portfolio management is "Enhanced indexing by matching primary risk factors. This strategy is formulated through creating a tracking portfolio with the same factor sensitivities as the index but with a different set of bonds.

#2

As a portfolio manager you match the index’ duration, key rate durations, percentage callable bonds, percentage corporate bonds, and so on. But you choose different bonds than those in the index (e.g., you own Ford bonds instead of GM bonds).